UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 28, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from________________to_______________
Commission file number
1-9050
HUDSON FOODS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 71-0427616
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1225 Hudson Road, Rogers, Arkansas 72756
(Address of principal executive offices) (Zip Code)
(501) 636-1100
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of January 16, 1997 Hudson Foods, Inc. had 20,615,242 shares of $0.01
par value Class A Common Stock outstanding and 9,602,522 shares of $0.01 par
value Class B Common Stock outstanding.
<PAGE>
PART 1 FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HUDSON FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
December 28, September 28,
1996 1996
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 21,196 $ 6,437
Receivables, net 123,104 108,792
Inventory:
Field inventory 57,257 61,250
Feed, eggs and other 35,686 32,273
Finished products 138,419 133,349
Other 23,001 22,373
- ------------------------------------------------------------------------------------------------------
Total current assets 398,663 364,474
- ------------------------------------------------------------------------------------------------------
Property, plant and equipment, net of accumulated
depreciation of $157,128 and $150,745 372,022 367,600
Excess cost of investment, net 13,978 14,119
Other assets 31,193 28,549
- ------------------------------------------------------------------------------------------------------
Total assets $815,856 $774,742
======================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations $ 24,820 $ 24,714
Accounts payable 54,162 69,552
Accrued liabilities 46,115 49,578
Deferred income taxes 6,741 6,741
- ------------------------------------------------------------------------------------------------------
Total current liabilities 131,838 150,585
- ------------------------------------------------------------------------------------------------------
Long-term obligations 273,420 224,951
- ------------------------------------------------------------------------------------------------------
Deferred income taxes and deferred gain 75,160 73,286
- ------------------------------------------------------------------------------------------------------
Stockholders' equity:
Common stock:
Class A, $.01 par value; 40,000,000 shares authorized;
issued 21,418,889 and 21,384,664 shares 214 214
Class B, $.01 par value; 40,000,000 shares authorized;
issued and outstanding 9,602,522 shares 96 96
Additional capital 159,759 159,314
Retained earnings 185,825 177,153
Treasury stock, at cost (836,633 and 877,196 Class A shares) (10,456) (10,857)
- ------------------------------------------------------------------------------------------------------
Total stockholders' equity 335,438 325,920
- ------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $815,856 $774,742
======================================================================================================
The accompanying notes are an integral part of the condensed consolidated
financial statements.
</TABLE>
<PAGE>
PART 1 FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
HUDSON FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(In thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended
December 28, December 30,
1996 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Sales $391,280 $340,674
Cost of sales 340,407 293,757
- ------------------------------------------------------------------------------------------
Gross profit 50,873 46,917
Selling 26,007 23,657
General and administrative 8,109 7,121
- ------------------------------------------------------------------------------------------
Operating income 16,757 16,139
- ------------------------------------------------------------------------------------------
Other expense:
Interest, net 1,352 1,270
- ------------------------------------------------------------------------------------------
Total other expense 1,352 1,270
- ------------------------------------------------------------------------------------------
Income before income taxes 15,405 14,869
Income tax expense 6,162 5,870
- ------------------------------------------------------------------------------------------
Net income $ 9,243 $ 8,999
==========================================================================================
Earnings per share $0.30 $0.30
==========================================================================================
Shares used in earnings per share computations:
Primary and fully diluted 30,470 30,404
==========================================================================================
Dividends per share:
Class A $0.0200 $0.0200
Class B $0.0167 $0.0167
==========================================================================================
Sales Growth 14.9% 21.7%
Margins (Percent of Sales):
Gross Profit 13.0% 13.8%
Operating Income 4.3% 4.7%
Income Before Income Taxes 3.9% 4.4%
Net Income 2.4% 2.6%
==========================================================================================
The accompanying notes are an integral part of the condensed consolidated
financial statements.
</TABLE>
<PAGE>
PART 1 FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
HUDSON FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
December 28, December 30,
1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,243 $ 8,999
Items included in net income not requiring cash:
Depreciation 6,417 5,435
Amortization 350 344
Deferred gain (501) (694)
Deferred income taxes 2,216 798
Changes in operating assets and liabilities (37,449) (19,201)
- -----------------------------------------------------------------------------------------------------
Cash flows used for operating activities (19,724) (4,319)
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (10,838) (38,821)
Disposition of property, plant and equipment, net -- 106
Funds received from trustee for capital project -- 6,479
Sale of business -- 29,314
Other (2,854) (1,394)
- -----------------------------------------------------------------------------------------------------
Cash flows used for investing activities (13,692) (4,316)
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of notes payable -- (12,300)
Additions to long-term obligations 50,000 55,000
Reduction of long-term obligations (1,425) (1,179)
Dividends (571) (569)
Exercise of stock options and other 171 77
- -----------------------------------------------------------------------------------------------------
Cash flows provided by financing activities 48,175 41,029
- -----------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents 14,759 32,394
Cash and cash equivalents at beginning of period 6,437 2,159
- -----------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 21,196 $ 34,553
=====================================================================================================
=====================================================================================================
Supplemental disclosure of cash flow information:
Interest paid, net of amount capitalized $ 1,889 $ 1,213
Income taxes paid $ 4,356 $ 7,335
=====================================================================================================
The accompanying notes are an integral part of the condensed consolidated
financial statements.
</TABLE>
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The condensed consolidated financial statements for the periods ended
December 28, 1996 and December 30, 1995 include, in the opinion of management,
all adjustments necessary to present fairly the results of operations and cash
flows for such periods. The Annual Report for the year ended September 28, 1996,
and the Company's Form 10-K contain additional information which should be read
in conjunction with these financial statements.
Note 2. On December 6, 1996, The Company borrowed $50.0 million under an
unsecured term loan agreement from an insurance company at 6.97% due December 6,
2006. Interest payments only will be due in the first three years. Beginning in
the fourth year, quarterly principal and monthly interest payments will be due.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Hudson Foods, Inc.
We have reviewed the condensed consolidated balance sheet of Hudson Foods, Inc.
and subsidiaries as of December 28, 1996 and the related condensed consolidated
statements of operations for the three months ended December 30, 1995, and cash
flows for the three months then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of September 28, 1996, and the
related consolidated statements of operations and cash flows for the year then
ended (not presented herein); and in our report dated October 29, 1996, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of September 28, 1996 is fairly stated in all
material respects in relation to the consolidated balance sheet from which it
has been derived.
Coopers & Lybrand L.L.P.
Tulsa, Oklahoma
January 21, 1997
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Historically, the Company's operating results have been heavily influenced by
two factors: the cost of feed grains and commodity-based finished product
prices. These two factors have fluctuated significantly and independently. In
recent years the Company has undertaken a business strategy to increase the
production and sale of further-processed products and increase sales to large
customers such as club store and foodservice chains. In fiscal 1996, one such
customer accounted for approximately 18.7% of total sales. This strategy helps
to decrease the proportion of feed grain costs to total cost of sales, which
reduces the impact of commodity cost fluctuations. In addition, the sales prices
of further-processed products are less sensitive to commodity price
fluctuations. Even so, a material increase in feed costs or a material decrease
in finished product prices could have an adverse effect on the Company, but
management believes that the implementation of this strategy has reduced the
Company's vulnerability to such price fluctuations.
International sales accounted for 17.5% of the Company's total sales during
fiscal 1996. The Company's primary international markets are Russia, Eastern
Europe, Asia and Central America and the main products sold were chicken leg
quarters, chicken paws and turkey thigh meat.
The Company believes that its operations are in substantial compliance with
applicable environmental laws and regulations.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
FIRST QUARTER OF FISCAL 1997 COMPARED WITH
FIRST QUARTER OF FISCAL 1996
Sales from the Company's operations were $391.3 million for the first quarter of
fiscal 1997, an increase of $50.6 million, or 14.9%, over the first quarter of
fiscal 1996. International sales were 17.3% and 15.8% of sales for the first
quarter of fiscal 1997 and 1996, respectively. The Company's primary
international markets are Russia, Eastern Europe, Asia and Central America and
the main products sold were chicken leg quarters, chicken paws and turkey thigh
meat. The sales increase primarily resulted from the following:
Chicken sales increased 34.4% to $226.6 million in the first quarter
of fiscal 1997 from $168.6 million in the first quarter of fiscal 1996
primarily due to a 22.0% increase in volume and a 10.1% increase in selling
prices. The Company's sales to its customer groups of foodservice, club
stores, retail and international all increased due to continuing consumer
demand for chicken products.
Turkey sales increased 3.4% to $54.7 million in the first quarter of
fiscal 1997 from $52.9 million in the first quarter of fiscal 1996 mainly
due to an 18.6% increase in selling prices, offset by a 12.8% decrease in
volume. The Company has traditionally sold large volumes of whole turkeys
for holiday consumption in the first quarter of each fiscal year. But after
the first quarter of fiscal 1996, the Company made the decision to no
longer sell whole birds. Instead, all turkey meat is now further-processed.
That change in product mix was the primary cause of the large increase in
selling prices and the decrease in volume.
Portioned entree sales increased 15.2% to $50.2 million in the first
quarter of fiscal 1997 from $43.6 million in the first quarter of fiscal
1996 due to a 12.0% increase in volume and a 2.9% increase in selling
prices. The volume increase was primarily due to expanded sales to
foodservice customers, especially schools, and also retail customers. In
fiscal 1996, the Company added a new line of sandwiches and a line of main
entrees for vending and convenience store customers, both of which are
beginning to have significant sales.
Beef sales increased 33.6% to $27.7 million in the first quarter of
fiscal 1997 from $20.7 million in the first quarter of fiscal 1996 due to a
27.2% increase in volume and a 5.0% increase in selling prices. The volume
increase was primarily due to increased sales to retail customers. The
Company is beginning to see increased sales from its efforts to expand its
customer base.
Luncheon meat sales decreased 55.2% to $19.5 million in the first
quarter of fiscal 1997 from $43.5 million in the first quarter of fiscal
1996 primarily due to a 57.4% decrease in volume which was partially offset
by a 5.4% increase in selling prices. The volume decrease was due to the
December 29, 1995 sale of the Company's Topeka, Kansas luncheon meat plant
and its related brand names and the closing and subsequent sale of its
Wichita, Kansas luncheon meat plant. The Company continues to produce
luncheon meat products at its plant in Albert Lea, Minnesota. The increase
in selling prices was primarily due to product mix changes that resulted
from the sale.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
FIRST QUARTER OF FISCAL 1997 COMPARED WITH
FIRST QUARTER OF FISCAL 1996 (CONTINUED)
Cost of sales was $340.4 million for the first quarter of fiscal 1997, an
increase of $46.7 million, or 15.9%, over the first quarter of fiscal 1996. As a
percentage of sales, cost of sales increased to 87.0% in the first quarter of
fiscal 1997 from 86.2% in the first quarter of fiscal 1996. The increase was
primarily due to increases in volume and higher feed and ingredient costs that
resulted from high grain markets. Feed and ingredient costs increased to 23.6%
of sales for the first quarter of fiscal 1997 from 21.4% for the first quarter
of fiscal 1996.
Gross profit was $50.9 million in the first quarter of fiscal 1997, an increase
of $4.0 million, or 8.4%, from the first quarter of fiscal 1996. As a percentage
of sales, gross profit decreased to 13.0% in the first quarter of fiscal 1997
from 13.8% in the first quarter of fiscal 1996 due to the factors discussed
above.
Selling and general and administrative expenses were $34.1 million in the first
quarter of fiscal 1997, an increase of $3.3 million, or 10.8%, over the first
quarter of fiscal 1996. As a percentage of sales, selling and general and
administrative expenses decreased to 8.7% in the first quarter of fiscal 1997
from 9.0% in the first quarter of fiscal 1996.
Operating income was $16.8 million for the first quarter of fiscal 1997, an
increase of $.6 million or 3.8% from the first quarter of fiscal 1996. The
increase was primarily due to the growth in the Company's operations described
previously.
Interest expense increased as a result of $120 million of long-term borrowings
made in fiscal 1996.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 28, 1996 was $266.8 million compared with $213.9
million at September 28, 1996 and the current ratio was 3.02 to 1 and 2.42 to 1
at December 28, 1996 and September 28, 1996, respectively. Accounts receivable
increased mainly due to expanded sales in both domestic and international
markets. Inventory increased primarily due to inventory build-up to meet
increased sales, especially in international markets. The Company's total
capitalization, as represented by long-term obligations plus stockholders'
equity, was $608.9 million on December 28, 1996, compared with $550.9 million on
September 28, 1996. Long-term obligations represented 44.9% and 40.8% of total
capitalization on December 28, 1996 and September 28, 1996, respectively.
Cash flows used for operating activities were $19.7 million in the first quarter
of fiscal 1997 compared with $4.3 million in the first quarter of fiscal 1996.
The change was primarily due to increases in operating assets, especially
accounts receivable and finished product inventory, and decreases in accounts
payable and accrued liabilities.
For the first quarter of fiscal 1997 and 1996, the Company had capital
expenditures of $10.8 million and $38.8 million, respectively. Capital
expenditures, in the first quarter of fiscal 1997, were for the addition of
cooking facilities to the Company's Indiana facility, the continuing
construction of a chicken complex near Henderson, Kentucky, the expansion and/or
upgrading of other production facilities and related equipment and the expansion
and/or upgrading of poultry grow-out facilities. The Kentucky complex was
scheduled to be producing 1.3 million birds per week by July 1997, but at
present, the Company believes it will be November 1997 before that level is
reached. The Company has experienced delays in the construction of grow-out
houses due to bad weather. These delays have resulted in a lack of birds for
processing.
The Company's capital budget for fiscal 1997 contemplates aggregate capital
expenditures of approximately $65 million for the addition of cooking facilities
at the Company's Indiana facility, completion of the chicken complex near
Henderson, Kentucky and upgrading and/or expansion of current production
facilities and related equipment.
Historically, the Company's operations have been financed through internally
generated funds, borrowings, lease arrangements and the issuance of common
stock. On April 30, 1996, the Company entered into a $200 million unsecured
credit agreement that expires on June 30, 1999. At December 28, 1996, the
Company did not have any notes payable outstanding under the agreement but had
$17.3 million in outstanding letters of credit. The credit agreement, among
other things, limits the payment of dividends to approximately $2.8 million in
any fiscal year and limits annual capital expenditures and lease obligations. It
requires the maintenance of minimum levels of working capital and tangible net
worth and requires that the current ratio, leverage ratio and cash flow coverage
ratio be maintained at certain levels. It also limits the creation of new
secured debt to $25.0 million and new unsecured short-term debt with parties
outside the credit agreement to $20.0 million. Additionally, an event of default
will occur if the aggregate outstanding voting power of James T. Hudson and his
immediate family is reduced below 51%.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Company has three separate unsecured short-term credit agreements with
financial institutions giving the Company the right to borrow up to $15.0
million each from two institutions and $10.0 million from the other. At December
28, 1996, the Company did not have any notes payable outstanding under these
agreements.
Total long-term obligations and current portion of long-term obligations
increased $48.6 million due to the net effect of the following: 1) proceeds
received on a loan from an insurance company totaling $50.0 million and 2)
normal debt payments.
On December 6, 1996, the Company borrowed $50.0 million under an unsecured term
loan agreement from an insurance company at 6.97% due December 6, 2006. Interest
payments only will be due in the first three years. Beginning in the fourth
year, quarterly principal and monthly interest payments will be due. The
unsecured loan agreement contains restrictions and covenants which are
substantially the same as those included in the $200.0 million credit agreement.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Sequentially
Number Description of Exhibit Numbered Page
4a Restated Certificate of Incorporated by
Incorporation of Hudson reference from
Foods, Inc., Section 4 Registration
Statement No. 33-15274
10 Hudson Foods, Inc. Note
Purchase Agreement dated
December 6, 1996, $50,000,000,
6.97% Senior Notes due
December 6, 2006
15 Letter regarding unaudited
interim financial information Page 14
27 Financial Data Schedule
(b) Reports on Form 8-K
Not Applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Hudson Foods, Inc.
Date January 29, 1997 Michael T. Hudson
President and Chief Executive Officer
Date January 29, 1997 Charles B. Jurgensmeyer
Chief Financial Officer
[Execution Copy]
=================================================================
HUDSON FOODS, INC.
$50,000,000
6.97% SENIOR NOTES DUE DECEMBER 6, 2006
---------------
NOTE AGREEMENT
---------------
Dated as of December 6, 1996
=================================================================
<PAGE>
TABLE OF CONTENTS
(Not Part of Agreement)
Page
1. Authorization of Issues of Notes. -1-
2. Purchase and Sale of Notes. -1-
3. Conditions of Closing. -2-
3A. Certain Documents. -2-
3B. Opinion of Purchasers' Special Counsel. -2-
3C. Representations and Warranties; No Default. -3-
3D. Good Standing . -3-
3E. Legality. -3-
3F. Private Placement Number. -3-
3G. Structuring Fee. -3-
3H. Compliance with this Agreement. -3-
3I. Proceedings. -3-
3J. Hudson Midwest Guaranty -3-
4. Prepayments. -4-
4A. Required Prepayments. -4-
4B. Optional Prepayment With Yield-Maintenance Amount. -4-
4C. Notice of Optional Prepayment. -4-
4D. Partial Payments Pro Rata. -5-
4E. Retirement of Notes. -5-
5. Affirmative Covenants. -5-
5A. Financial Statements. -5-
5B. Officer's Certificates. -9-
5C. Accountants' Certificates. -10-
5D. Inspection. -10-
5E. Equal and Ratable Lien; Equitable Lien. -10-
5F. Payment of Taxes and Claims. -11-
5G. Maintenance of Properties; Corporate Existence; etc. -12-
5H. Payment of Notes and Maintenance of Office. -13-
5I. Guaranties of Subsidiaries. -13-
6. Negative Covenants. -14-
6A. Financial Covenants. -14-
6A(1) Tangible Net Worth. -14-
6A(2) Working Capital; Current Ratio. -15-
6A(3) Leverage Ratio. -15-
6A(4) Cash Flow Coverage Ratio. -16-
6A(5) Current Debt. -17-
6B. Dividends and Prepayments on Subordinated Debt. -17-
6C. Liens, Debt, and Other Restrictions. -18-
6C(1) Liens. -18-
6C(2) Limitations on Indebtedness. -20-
6C(3) Restricted Investments. -23-
6C(4) Merger, Consolidation, Transfers of Property, etc. -24-
6C(5) Operating Lease Rentals. -25-
6D. Transactions with Affiliates. -25-
6E. Capital Expenditures. -25-
6F. Nature of Business. -26-
6G. ERISA. -26-
<PAGE>
6H. Private Offering. -27-
6I. Certain Accounting Matters. -27-
7. Events of Default. -28-
7A. Acceleration. -28-
7B. Rescission of Acceleration. -31-
7C. Notice of Acceleration or Rescission. -31-
7D. Other Remedies. -32-
8. Representations, Covenants and Warranties. -32-
8A. Corporate Organization and Authority. -32-
8B. Financial Statements; Indebtedness; Material Adverse Change. -33-
8C. Nature of Business. -34-
8D. Subsidiaries and Affiliates. -34-
8E. Title to Properties; Leases; Patents, Trademarks, etc. -34-
8F. Taxes. -35-
8G. Pending Litigation. -35-
8H. Full Disclosure. -36-
8I. Charter Instruments, Other Agreements, etc. -36-
8J. Restrictions on Company and Subsidiaries. -36-
8K. Compliance with Law. -37-
8L. ERISA. -37-
8M. Certain Laws. -39-
8N. Transactions are Legal and Authorized; Obligations are
Enforceable. -40-
8O. Governmental Consent; Certain Laws. -41-
8P. Private Offering of Notes. -41-
8Q. No Defaults; Transactions Prior to Closing Date, etc. -41-
8R. Use of Proceeds of Notes. -42-
8S. Solvency. -42-
9. Representations of the Purchaser. -42-
9A. Nature of Purchase. -42-
9B. Source of Funds. -43-
10. Definitions. -43-
10A. Yield-Maintenance Terms. -43-
10B. Other Terms. -44-
10C. Accounting Principles, Terms and Determinations. -54-
11. MISCELLANEOUS. -54-
11A. Note Payments. -54-
11B. Expenses. -55-
11C. Consent to Amendments. -55-
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes. -56-
11E. Persons Deemed Owners; Participations. -56-
11F. Survival of Representations and Warranties; Entire Agreement. -56-
11G. Successors and Assigns. -57-
11H. Disclosure to Other Persons. -57-
11I. Notices. -57-
11J. Payments Due on Non-Business Days. -58-
11K. Satisfaction Requirement. -58-
11L. Governing Law. -58-
11M. Severability. -58-
11N. Descriptive Headings. -58-
11O. Maximum Interest Payable. -58-
11P. Jurisdiction; Service of Process. -59-
11Q. Counterparts. -60-
<PAGE>
ANNEX 1 -- PURCHASER SCHEDULE
ANNEX 2 -- PAYMENT INSTRUCTIONS
ANNEX 3 -- INFORMATION AS TO COMPANY AND SUBSIDIARIES
ANNEX 4 -- INFORMATION AS TO BUSINESS COVENANTS
EXHIBIT A -- FORM OF NOTE
EXHIBIT B -- FORM OF OPINION OF COMPANY'S COUNSEL
EXHIBIT C -- FORM OF COMPANY OFFICER'S CERTIFICATE
EXHIBIT D -- FORM OF COMPANY SECRETARY'S CERTIFICATE
EXHIBIT E -- FORM OF SUBSIDIARY GUARANTY
<PAGE>
HUDSON FOODS, INC.
1225 Hudson Road
Rogers, Arkansas 72756
As of December 6, 1996
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
$50,000,000 6.97% Senior Notes due December 6, 2006
Ladies and Gentlemen:
The undersigned, Hudson Foods, Inc., a Delaware corporation (the
"Company"), hereby agrees with you as follows:
PARAGRAPH 1. AUTHORIZATION OF ISSUES OF NOTES.
1. Authorization of Issues of Notes. The Company will authorize the issue
of its senior promissory notes in the aggregate principal amount of $50,000,000,
to be dated the date of issue thereof, to mature December 6, 2006, to bear
interest on the unpaid balance thereof from the date thereof until the principal
thereof shall have become due and payable at the rate of 6.97% per annum and on
overdue payments at the rate specified therein, and to be substantially in the
form of Exhibit A attached hereto. The term "Notes" as used herein shall include
each such senior promissory note delivered pursuant to any provision of this
Agreement and each such senior promissory note delivered in substitution or
exchange for any other Note pursuant to any such provision. Capitalized terms
used herein have the meanings specified in paragraph 10.
PARAGRAPH 2. PURCHASE AND SALE OF NOTES.
2. Purchase and Sale of Notes. The Company hereby agrees to sell to you
and, subject to the terms and conditions herein set forth, you agree to purchase
from the Company the aggregate principal amount of Notes set forth opposite your
name in the Purchaser Schedule attached hereto at 100% of such aggregate
principal amount. The Company will deliver to you, at the offices of Prudential
Securities Inc. at 199 Water Street, 31st Floor, New York City, New York 10292,
one or more Notes registered in your name, evidencing the aggregate principal
amount of Notes to be purchased by you and in the denomination or denominations
specified with respect to you in the Purchaser Schedule against payment of the
purchase price thereof by transfer of immediately available funds for credit to
the account of Hudson Foods, Inc. as specified by the Company in Annex 2 hereto
on the date of closing, which shall be December 6, 1996 or any other date on or
before December 20, 1996 upon which the Company and the Purchasers may mutually
agree (the "Closing" or the "Date of Closing").
PARAGRAPH 3. CONDITIONS PRECEDENT.
3. Conditions of Closing. Your obligation to purchase and pay for the Notes
to be purchased by you hereunder is subject to the satisfaction, on or before
the Date of Closing, of the following conditions:
3A. Certain Documents. You shall have received the following, each dated
the Date of Closing:
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(i) The Notes to be purchased by you.
(ii) A certificate signed by a Senior Officer of the
Company, substantially in the form of Exhibit C hereto.
(iii) A certificate signed by the Secretary or an
Assistant Secretary of the Company, substantially in the form of
Exhibit D hereto.
(iv) A favorable opinion of Wright, Lindsey & Jennings,
special counsel to the Company, satisfactory to the Purchasers and
substantially in the form of Exhibit B attached hereto and as to
such other matters as you may reasonably request.
(v) Certified copies of Requests for Information or
Copies (Form UCC-11), or equivalent reports, listing all effective
financing statements which name the Company or any Subsidiary (under
its present name and any previous name) as debtor and which are
filed in Arkansas, Indiana, Alabama, Maryland, Minnesota, Missouri,
Ohio, Georgia, and Tennessee.
3B. Opinion of Purchasers' Special Counsel. You shall have received from
Thomas P. Donahue, who is acting as counsel for you in connection with this
transaction, a favorable opinion satisfactory to you as to such matters incident
to the matters herein contemplated as it may reasonably request.
3C. Representations and Warranties; No Default. The representations and
warranties contained in paragraph 8 shall be true on and as of the Date of
Closing, except to the extent of changes caused by the transactions herein
contemplated; and there shall exist on the Date of Closing no Event of Default
or Default.
3D. Good Standing Certificate. A certificate, dated on or immediately prior
to the Date of Closing, from the Secretary of State (or other appropriate
official) of Delaware, certifying as to the due incorporation and good standing
of the Company.
3E. Legality. The Notes to be acquired by you shall, on the Closing Date,
qualify as a legal investment for you under applicable insurance law (without
regard to any "basket" or "leeway" provisions), and such acquisition shall not
subject you to any penalty or other onerous condition contained in or pursuant
to any such law or regulation, and you shall have received such evidence as you
may reasonably request to establish compliance with this condition.
3F. Private Placement Number. The Company shall have obtained or caused to
be obtained a private placement number for the Notes from the CUSIP Service
Bureau of Standard & Poor's (a division of McGraw-Hill, Inc.) and you shall have
been informed of such private placement number.
3G. Structuring Fee. The Company shall have paid you a $15,000 Structuring
Fee in cash.
3H. Compliance with this Agreement. Each of the Company and the
Subsidiaries shall have performed and complied with all agreements and
conditions contained herein that are required to be performed or complied with
by the Company and the Subsidiaries on or prior to the Date of Closing, and such
performance and compliance shall remain in effect on the Date of Closing.
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3I. Proceedings. All corporate and other proceedings taken or to be taken
in connection with the transactions contemplated hereby and all documents
incident thereto shall be satisfactory in substance and form to you, and you
shall have received all such counterpart originals or certified or other copies
of such documents as it may reasonably request.
3J. Hudson Midwest Guaranty. Hudson Midwest shall have delivered to you a
Guaranty in substantially the form of Exhibit E hereto.
PARAGRAPH 4. PREPAYMENTS.
4. Prepayments. The Notes shall be subject to prepayment only with respect
to the required prepayments specified in paragraph 4A and the optional
prepayments permitted by paragraph 4B.
4A. Required Prepayments. Until the Notes shall be paid in full, the
Company shall apply to the prepayment of the Notes, without premium, the sum of
$1,785,714 on each of the following dates, and such principal amounts of the
Notes, together with interest thereon to the prepayment dates, shall become due
on such prepayment dates:
March 6, 2000 December 6, 2001 September 6, 2003 June 6, 2005
June 6, 2000 March 6, 2002 December 6, 2003 September 6, 2005
September 6, 2000 June 6, 2002 March 6, 2004 December 6, 2005
December 6, 2000 September 6, 2002 June 6, 2004 March 6, 2006
March 6, 2001 December 6, 2002 September 6, 2004 June 6, 2006
June 6, 2001 March 6, 2003 December 6, 2004 September 6, 2006
September 6, 2001 June 6, 2003 March 6, 2005
The remaining outstanding principal amount of the Notes, together with interest
accrued thereon, shall become due on the maturity date of the Notes.
4B. Optional Prepayment With Yield-Maintenance Amount. The Notes shall be
subject to prepayment on any Business Day on or after 90 days from the date of
issuance thereof, in whole at any time or from time to time in part (in
multiples of $1,000,000), at the option of the Company, at 100% of the principal
amount so prepaid plus interest thereon to the prepayment date and the
Yield-Maintenance Amount, if any, with respect to each Note. Any partial
prepayment of the Notes pursuant to this paragraph 4B shall be applied in
satisfaction of required payments of principal in inverse order of their
scheduled due dates.
4C. Notice of Optional Prepayment. The Company shall give the holder of
each Note irrevocable written notice of any prepayment pursuant to paragraph 4B
not less than 10 Business Days prior to the prepayment date, specifying such
prepayment date and the principal amount of the Notes, and of the Notes held by
such holder, to be prepaid on such date and stating that such prepayment is to
be made pursuant to paragraph 4B. Notice of prepayment having been given as
aforesaid, the principal amount of the Notes specified in such notice, together
with interest thereon to the prepayment date and together with the
Yield-Maintenance Amount, if any, with respect thereto, shall become due and
payable on such prepayment date. The Company shall, on or before the day on
which it gives written notice of any prepayment pursuant to paragraph 4B, give
telephonic notice of the principal amount of the Notes to be prepaid and the
prepayment date to each holder which shall have designated a recipient of such
notices in the Purchaser Schedule attached hereto or by notice in writing to the
Company.
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4D. Partial Payments Pro Rata. Upon any partial prepayment of the Notes
pursuant to paragraph 4A or 4B, the principal amount so prepaid shall be
allocated to all Notes at the time outstanding (including, for the purpose of
this paragraph 4D only, all Notes prepaid or otherwise retired or purchased or
otherwise acquired by the Company or any of its Subsidiaries or Affiliates other
than by prepayment pursuant to paragraph 4A or 4B) in proportion to the
respective outstanding principal amounts thereof.
4E. Retirement of Notes. The Company shall not, and shall not permit any of
its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or in
part prior to their stated final maturity (other than by prepayment pursuant to
paragraph 4A or 4B or upon acceleration of such final maturity pursuant to
paragraph 7A), or purchase or otherwise acquire, directly or indirectly, Notes
held by any holder.
PARAGRAPH 5. AFFIRMATIVE COVENANTS.
5. Affirmative Covenants. So long as any Note shall remain unpaid, the
Company covenants that
5A. Financial Statements. The Company will deliver to each holder:
(i) Quarterly Statements -- as soon as practicable after
the end of each quarterly fiscal period in each fiscal year of the
Company (other than the last quarterly fiscal period of each such
fiscal year), and in any event within 45 days thereafter, duplicate
copies of
(a) a consolidated balance sheet of the
Company and the Subsidiaries as at the end of such
quarter, and
(b) consolidated statements of operations
and cash flows of the Company and the Subsidiaries for
such quarter and (in the case of the second and third
quarters) for the portion of the fiscal year ending with
such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally and certified as complete and
correct, subject to changes resulting from year-end adjustments, by
a Senior Financial Officer, and accompanied by the certificate
required by paragraph 5B hereof;
(ii) Annual Statements -- as soon as practicable after
the end of each fiscal year of the Company, and in any event within
90 days thereafter, duplicate copies of
(a) consolidated balance sheets of the
Company and the Subsidiaries as at the end of such year,
and
(b) consolidated statements of operations
and cash flows of the Company and the Subsidiaries
for such year,
<PAGE>
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP and accompanied by
(I) an opinion of independent
certified public accountants of recognized
national standing, which opinion shall,
without qualification (including, without
limitation, qualifications related to the
scope of the audit or the ability of the
Company or a Subsidiary to continue as a
going concern), state that such financial
statements present fairly, in all material
respects, the financial position of the
companies being reported upon and their
results of operations and cash flows and
have been prepared in conformity with GAAP,
and that the examination of such accountants
in connection with such financial statements
has been made in accordance with generally
accepted auditing standards, and that such
audit provides a reasonable basis for such
opinion in the circumstances,
(II) a certification by a Senior
Financial Officer that such consolidated
financial statements are complete and
correct, and
(III) the certificates required
by paragraph 5B and paragraph 5C hereof;
(iii) Opinions of Independent Accountants and Counsel --
as soon as practicable after the end of each fiscal year of the
Company, and in any event within 90 days thereafter, duplicate
copies of all opinions of independent accountants and counsel
required pursuant to paragraph 5F hereof;
(iv) Audit Reports -- promptly upon receipt thereof, a
copy of each other report submitted to the Company or any Subsidiary
by independent accountants in connection with any annual, interim or
special audit made by them of the books of the Company or any
Subsidiary;
(v) SEC and Other Reports -- within 15 days of their
becoming available, one copy, without duplication, of (a) each
financial statement, report, notice or proxy statement sent by the
Company or any Subsidiary to public securities holders generally,
and (b) each regular or periodic report (including, without
limitation, each Annual Report on Form 10-K, each Quarterly Report
on Form 10-Q and each Current Report on Form 8-K), each registration
statement (other than registration statements on Form S-8) which
shall have become effective (without exhibits except as expressly
requested by a holder of Notes), and each final prospectus, and all
amendments to any of the foregoing, filed by the Company or any
Subsidiary with, or received by, such Person in connection therewith
from, the Securities and Exchange Commission or any successor
agency;
(vi) ERISA --
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(a) immediately upon becoming aware of the occurrence of any
(I) "reportable event" (as such
term is defined in section 4043 of ERISA), or
(II) "prohibited transaction"
(as such term is defined in section 406 of
ERISA or section 4975 of the Code),
in connection with any Pension Plan or any trust created
thereunder, a written notice specifying the nature
thereof, what action the Company is taking or proposes
to take with respect thereto and, when known, any action
taken by the IRS, the Department of Labor or the PBGC
with respect thereto; and
(b) prompt written notice of and, where
applicable, a description of
(I) any notice from the PBGC in
respect of the commencement of any
proceedings pursuant to section 4042 of
ERISA to terminate any Pension Plan or for
the appointment of a trustee to administer
any Pension Plan,
(II) any distress termination
notice delivered to the PBGC under section
4041 of ERISA in respect of any Pension
Plan, and any determination of the PBGC in
respect thereof,
(III) the placement of any
Multiemployer Plan in reorganization
status under Title IV of ERISA,
(IV) any Multiemployer Plan
becoming "insolvent" (as such term is
defined in section 4245 of ERISA) under
Title IV of ERISA,
(V) the whole or partial
withdrawal of the Company or any ERISA
Affiliate from any Multiemployer Plan and
the withdrawal liability incurred in
connection therewith, and
(VI) any material increase in
contingent liabilities of the Company or any
Subsidiary in respect of any post-retirement
employee welfare benefits.
(vii) Actions, Proceedings -- promptly after the
commencement thereof, written notice of any action or proceeding
relating to the Company or any Subsidiary in any court or before any
Governmental Authority or arbitration board or tribunal as to which
there is a reasonable possibility of an adverse determination and
that, if adversely determined, is reasonably likely to have a
Material Adverse Effect;
<PAGE>
(viii) Certain Matters -- prompt written notice of and a
description of any event or circumstance that, had such event or
circumstance occurred or existed immediately prior to the Closing
Date, would have been required to be disclosed as an exception to
any statement set forth in paragraph 8M(i) or paragraph 8M(ii)
hereof;
(ix) Notice of Default or Event of Default --
immediately upon becoming aware of the existence of any condition or
event that constitutes a Default or an Event of Default, a written
notice specifying the nature and period of existence thereof and
what action the Company is taking or proposes to take with respect
thereto;
(x) Notice of Claimed Default -- immediately upon
becoming aware that the holder of any Note, or of any Indebtedness
or other Security of the Company or any Subsidiary, shall have given
notice or taken any other action with respect to a claimed Default,
Event of Default, default or event of default, a written notice
specifying the notice given or action taken by such holder and the
nature of the claimed Default, Event of Default, default or event of
default and what action the Company is taking or proposes to take
with respect thereto;
(xi) Information Furnished to Other Creditors --
promptly after any request therefor, copies of any statement, report
or certificate furnished to any holder of Indebtedness of the
Company or any Subsidiary;
(xii) Rule 144A -- promptly after any request therefor,
information requested to comply with 17 C.F.R.ss.230.144A, as
amended from time to time; and
(xiii) Requested Information -- promptly after any
request therefor, such other data and information as from time to
time may be reasonably requested by any holder of Notes, including,
without limitation, data, information, agreements, instruments or
documents relating to the business or financial operations or
performance of the Company or any Subsidiary and any financial
statements prepared by the Company (in addition to the financial
statements specified in clause (i) and clause (ii) of this paragraph
5A), in each case which may be reasonably requested by any holder of
Notes.
5B. Officer's Certificates. Each set of financial statements delivered to
each holder of Notes pursuant to paragraph 5A(i) or paragraph 5A(ii) hereof
shall be accompanied by a certificate of a Senior Financial Officer setting
forth:
(i) Covenant Compliance -- the information (including
detailed calculations) required in order to establish whether the
Company was in compliance with the requirements of paragraphs 6A,
6B, 6C(1), 6C(2), 6C(3), 6C(4), 6C(5) and 6E hereof, during the
period covered by the income statement then being furnished
(including with respect to each such Section, where applicable, the
calculations of the maximum or minimum amount, ratio or percentage,
as the case may be, permissible under the terms of such paragraphs,
and the calculation of the amounts, ratio or percentage then in
existence);
<PAGE>
(ii) Event of Default -- a statement that the signers
have reviewed the relevant terms hereof and have made, or caused to
be made, under their supervision, a review of the transactions and
conditions of the Company and the Subsidiaries from the beginning of
the accounting period covered by the income statement being
delivered therewith to the date of the certificate and that such
review shall not have disclosed the existence during such period of
any condition or event that constitutes a Default or an Event of
Default or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what
action the Company shall have taken or proposes to take with respect
thereto; and
(iii) Investments -- a description of all investments of
the Company and the Subsidiaries made pursuant to paragraph
6C(3)(vi) hereof during such accounting period (which description
shall specify the type of investment, the cost thereof and the book
value thereof), and, if any such investments are made, a description
of the Company's then-current investment policy.
5C. Accountants' Certificates. Each set of annual financial statements
delivered pursuant to paragraph 5A(ii) hereof shall be accompanied by a
certificate of the accountants who certify such financial statements, stating
that
(i) they have reviewed this Agreement and stating
further, whether, in making their audit, such accountants have
become aware of any condition or event that then constitutes a
Default or an Event of Default and, if such accountants are aware
that any such condition or event then exists, specifying the nature
and period of existence thereof, and
(ii) they have reviewed the annual certificate of a
Senior Financial Officer of the Company provided pursuant to clause
(i) of paragraph 5B hereof and that they confirm the calculations
contained therein.
5D. Inspection. The Company will permit, upon prior notice to the Company,
the representatives of each holder of Notes (at the expense of the Company at
any time when a Default or an Event of Default has occurred and is in existence,
and otherwise at the expense of such holder) to visit and inspect any of the
Properties of the Company or any Subsidiary, to examine all their respective
books of account, records, reports and other papers, to make copies and extracts
therefrom and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants (and by
this provision the Company authorizes such accountants to discuss the finances
and affairs of the Company and the Subsidiaries), all at such reasonable times
and as often as may be reasonably requested.
<PAGE>
5E. Equal and Ratable Lien; Equitable Lien. In case any Property shall be
subjected to a Lien (other than Liens permitted by paragraph 6C(1)), the Company
will forthwith make or cause to be made provision whereby the Notes will be
secured equally and ratably with all other obligations secured thereby pursuant
to such agreements and instruments as shall be approved by the Required Holders,
and the Company will cause to be delivered to each holder of a Note an opinion
of independent counsel to the effect that such agreements and instruments are
enforceable in accordance with their terms. Regardless of whether the Company
complies with the provisions of the immediately preceding sentence, in case any
Property shall be subjected to a Lien in violation of this paragraph 5E, the
Notes shall have the benefit and with such priority as, the holders of Notes may
be entitled thereto under applicable law, of an equitable Lien on such Property
securing the Notes. A violation of paragraph 6C(1) will constitute an Event of
Default, whether or not any such provision is made or action is taken pursuant
to this paragraph 5E.
5F. Payment of Taxes and Claims. The Company will, and will cause each
Subsidiary to, pay before they become delinquent:
(i) all taxes, assessments and governmental charges or
levies imposed upon it or its Property; and
(ii) all claims or demands of materialmen, mechanics,
carriers, warehousemen, vendors, landlords and other like Persons
that, if unpaid, might result in the creation of a Lien upon its
Property;
provided, that items of the foregoing description need not be paid
(a) while being actively contested in good
faith and by appropriate proceedings as long as adequate
book reserves have been established and maintained and
exist with respect thereto, and
(b) so long as the title of the Company or
the other Subsidiary, as the case may be, to, and its
right to use, such Property, is not materially adversely
affected thereby.
In the case of any such item being contested as described in the
immediately preceding sentence involving in excess of $2,000,000, the
appropriateness of the proceedings will be supported by an opinion of the
independent counsel responsible for such proceedings and the adequacy of such
reserves will be supported by an opinion of the independent accountants of the
Company or such Subsidiary (which opinions will be delivered to you and the
other holders of Notes as provided in paragraph 5A(iii) hereof), provided that,
if the aggregate amount of all such items shall at any time exceed $3,000,000,
regardless of the amount of any individual item, the adequacy of the reserves
for all such items will be supported by opinions of the independent accountants
of the Company or such Subsidiary (which opinions will be delivered to you and
the other holders of the Notes as provided in paragraph 5A(iii) hereof).
5G. Maintenance of Properties; Corporate Existence; etc.
The Company will, and will cause each Subsidiary to:
(i) Property -- maintain its Property in good condition
and working order, ordinary wear and tear excepted, and make all
necessary renewals, replacements, additions, betterments and
improvements thereto;
<PAGE>
(ii) Insurance -- maintain, with financially sound and
reputable insurers accorded a rating by A.M. Best Company of "A" or
better and a size rating of "XII" or better (or a comparable rating
by any comparable successor rating agency), insurance with respect
to its Property and business against such casualties and
contingencies, of such types (including, without limitation,
insurance with respect to losses arising out of Property loss or
damage, public liability, business interruption, larceny, workers'
compensation, embezzlement or other criminal misappropriation) and
in such amounts as is customary in accordance with sound business
practices in the case of corporations of established reputations
engaged in the same or a similar business and similarly situated;
(iii) Financial Records -- keep accurate and complete
books of records and accounts in which accurate and complete entries
shall be made of all its business transactions and that will permit
the provision of accurate and complete financial statements in
accordance with GAAP;
(iv) Corporate Existence and Rights --
(a) do or cause to be done all things
necessary to preserve and keep in full force and effect
its corporate existence, rights (charter and statutory)
and franchises, except where the failure to do so, in
the aggregate, could not reasonably be expected to have
a Material Adverse Effect, and
(b) maintain each Subsidiary as a Subsidiary
and each Wholly-Owned Subsidiary as a Wholly-Owned
Subsidiary,
in each case except as permitted by paragraph 6C(4) hereof; and
(v) Compliance with Law -- not be in violation of any
law, ordinance or governmental rule or regulation to which it is
subject (including, without limitation, any Environmental Protection
Law or any Health Law) and not fail to obtain any license,
certificate, permit, franchise or other governmental authorization
necessary to the ownership of its Properties or to the conduct of
its business if such violations or failures to obtain, in the
aggregate, could reasonably be expected to have (i) a Material
Adverse Effect or (ii) a material adverse effect on the ability of
the Company or any Subsidiary to conduct in the future the business
it conducts at the time of such violation or failure to obtain.
5H. Payment of Notes and Maintenance of Office. The Company will punctually
pay, or cause to be paid, the principal of and interest (and Yield-Maintenance
Amount, if any) on the Notes, as and when the same shall become due according to
the terms of this Agreement and of the Notes. The Company will maintain an
office at the address of the Company set forth in paragraph 11I hereof where
notices, presentations and demands in respect of this Agreement or of the Notes
may be made upon the Company. Such office will be maintained at such address
until such time as the Company shall notify you and the other holders of the
Notes of any change of location of such office, which will in any event be
located within the United States of America.
5I. Guaranties of Subsidiaries.
<PAGE>
(i) New Subsidiaries. The Company shall cause each
Subsidiary not existing as of the Date of Closing to execute and
deliver to the holders of the Notes a Subsidiary Guaranty, in
substantially the form of Exhibit E hereto, within 10 Business Days
of the creation or acquisition of any such Subsidiary.
(ii) Certain Existing Subsidiaries. If Hudson Poland,
Hudson Development or Hudson Foreign Sales shall at any time own or
hold, directly or indirectly, assets having a book value equal to or
in excess of five percent of the total assets of the Company and the
Subsidiaries at such time, as would be shown on a consolidated
balance sheet for such Persons prepared in accordance with GAAP,
then the Company shall cause such Person to execute and deliver to
the holders of the Notes a Subsidiary Guaranty, in substantially the
form of Exhibit E hereto, within 10 Business Days of such time.
(iii) Delivery of Documents. The delivery of any
agreements pursuant to paragraph 5I(i) or paragraph 5I(ii) hereof
shall be accompanied by such other documents as any Purchaser or
other holder of Notes may reasonably request, including, without
limitation, charter documents, bylaws, and appropriate resolutions
of the Board of Directors of any such Subsidiary providing a
Subsidiary Guaranty.
(iv) Guaranties of Bank Credit Agreement Obligations.
Notwithstanding the other terms and provisions of this paragraph 5I,
the Company will not at any time permit any Subsidiary or Affiliate
to provide to the Banks any Guaranty of the Company's obligations
under the Bank Credit Agreement unless such Subsidiary or such
Affiliate shall, at the same time, deliver a Subsidiary Guaranty and
other documents to the holders of the Notes as specified in
paragraph 5I(iii) hereof.
PARAGRAPH 6. NEGATIVE COVENANTS.
6. Negative Covenants. So long as any Note shall remain unpaid,
6A. Financial Covenants.
6A(1). Tangible Net Worth. The Company will not permit, as of the last day
of each fiscal quarter, Tangible Net Worth to be less than the sum of (i)
$129,000,000, plus (ii) the amount of all proceeds of any issuance of capital
stock of the Company after May 18, 1994, plus (iii) the amount of any
Subordinated Debt which is converted into capital stock of the Company after May
18, 1994, plus (iv) in the case of each fiscal quarter ending on or after
October 1, 1994, the Applicable Net Income Carryover. As used herein,
"Tangible Net Worth" -- means the excess of total assets
over total liabilities, as each of total assets and total
liabilities would be shown on a consolidated balance sheet for the
Company and the Subsidiaries prepared in accordance with GAAP
consistent with GAAP applied in the preparation of the financial
statements referred to in paragraph 5A(i) and paragraph 5A(ii)
hereof, excluding, however, Intangible Assets from such
determination of total assets.
<PAGE>
"Intangible Assets" -- means (i) goodwill,
organizational expenses, research and development expenses,
trademarks, trade names, copyrights, patents, patent applications,
licenses and rights in any thereof, and other similar intangibles,
(ii) treasury stock, (iii) Securities which are not readily
marketable, (iv) cash held in a sinking or other analogous fund
established for the purpose of redemption, retirement or prepayment
of capital stock, (v) any write-up in the book value of any asset
resulting from a revaluation thereof subsequent to May 18, 1994, and
(vi) any items not included in clauses (i) through (v) above,
inclusive, which are treated as intangibles in conformity with GAAP.
"Applicable Net Income Carryover" -- at any time that
any determination thereof is to be made means an amount equal to the
sum of (i) 60% of the net income of the Company and the
Subsidiaries, determined on a consolidated basis for such Persons in
accordance with GAAP, for the fiscal year of the Company ending on
October 1, 1994, plus (ii) 60% of the net income of the Company and
the Subsidiaries, determined on a consolidated basis for such
Persons in accordance with GAAP, for each and every fiscal year of
the Company ending after October 1, 1994 which has ended on or
before the date such determination of Applicable Net Income
Carryover is to be made; provided, however, that, in the event that
such net income for any fiscal year described above is less than
zero, the net income of the Company and the Subsidiaries for such
fiscal year shall be deemed to be zero for purposes of calculating
Applicable Net Income Carryover.
6A(2). Working Capital; Current Ratio. The Company will not permit as of
the last day of each fiscal quarter:
(i) the ratio of current assets to current liabilities
(exclusive of current deferred taxes), in each case as would be
shown on a consolidated balance sheet for the Company and the
Subsidiaries at such time prepared in accordance with GAAP, to be
less than 1.5 to 1.0, and
(ii) the excess of current assets over current
liabilities (exclusive of current deferred taxes), in each case as
would be shown on a consolidated balance sheet for the Company and
the Subsidiaries at such time prepared in accordance with GAAP, to
be less than $60,000,000.
6A(3). Leverage Ratio. The Company will not permit, as of the last day of
each fiscal quarter, a Leverage Ratio to be more than 0.5 to 1.0. As used
herein:
<PAGE>
"Leverage Ratio" -- means for any date of determination
thereof, the quotient (expressed as a ratio) of (x) Indebtedness
with maturities of greater than one year (including, without
limitation, all current portions thereof and all Subordinated Debt)
of the Company and the Subsidiaries as would appear on a
consolidated balance sheet prepared in accordance with GAAP for such
Persons at such time, divided by (y) the sum of (i) Indebtedness
with maturities of greater than one year (including, without
limitation, all current portions thereof and all Subordinated Debt)
of the Company and the Subsidiaries as would appear on a
consolidated balance sheet prepared in accordance with GAAP for such
Persons at such time, plus (ii) stockholders' equity of the Company
and the Subsidiaries (excluding, in any event, any minority
interests) as would appear on a consolidated balance sheet prepared
in accordance with GAAP for such Persons at such time, plus (iii)
long-term deferred taxes, attributable to the Company's prior use of
cash accounting, of the Company and the Subsidiaries as would appear
on a consolidated balance sheet prepared in accordance with GAAP for
such Persons at such time, plus (iv) deferred taxes, attributable to
the Company's use of the "farm price method" of accounting for
deferred taxes, of the Company and the Subsidiaries as would appear
on a consolidated balance sheet prepared in accordance with GAAP for
such Persons at such time.
6A(4). Cash Flow Coverage Ratio. The Company will not permit, as of the
last day of each fiscal quarter, the Cash Flow Coverage Ratio to be less than
1.3 to 1.0 for the period of eight consecutive fiscal quarters then most
recently ended. As used herein:
"Cash Flow Coverage Ratio" means for any period of
determination thereof, the quotient (expressed as a ratio) of (x)
the sum of (i) Consolidated Net Income, plus (ii) income taxes of
the Company and the Subsidiaries, plus (iii) Consolidated Interest
Expense, plus (iv) Consolidated Lease Expense, plus (iv)
depreciation and amortization of the Company and the Subsidiaries,
divided by (y) the sum of (i) Consolidated Interest Expense, plus
(ii) Consolidated Lease Expense, plus (iii) all scheduled and
optional principal payments on long-term Indebtedness (including,
without limitation, imputed principal on Capital Leases), other
than, in each such case, the principal amount of any such
Indebtedness which shall be paid during such period from the
proceeds of Indebtedness incurred in connection with any refinancing
thereof prior to, or at the time of, the maturity thereof, plus (iv)
the sum of (a) dividends on the capital stock of the Company or a
Subsidiary (other than dividends paid to the Company or a
Subsidiary), (b) purchases or other acquisitions by the Company or
any Subsidiary of any capital stock of the Company, and (c)
distributions of assets to the Company's stockholders as such.
"Consolidated Net Income" means, for any period, net
income (or loss) from continuing operations (after income taxes) of
the Company and the Subsidiaries, excluding, in any event, net
income (or loss) in respect of extraordinary items, net income (or
loss) from discontinued operations and the cumulative effects of
changes in accounting principles, all as determined on a
consolidated basis for such Persons in accordance with GAAP.
<PAGE>
"Consolidated Interest Expense" means, for any period,
the aggregate amount of interest accrued or capitalized on, or with
respect to, Indebtedness (including, without limitation,
amortization of debt discount, imputed interest on Capital Leases
and interest on the Notes), but without giving effect to any
deduction for any interest income, of the Company and the
Subsidiaries determined on a consolidated basis for such Persons for
such period in accordance with GAAP.
"Consolidated Lease Expense" means, for any period, the
aggregate amount of rentals payable in respect of Operating Leases
for such period by any one or more of the Company and the
Subsidiaries, determined on a consolidated basis for such Persons
for such period in accordance with GAAP.
"Operating Lease" means, with respect to any Person, any
lease other than a Capital Lease.
6A(5). Current Debt. The Company will not, and will not permit any
Subsidiary to, have any Current Debt outstanding on any day unless, within the
period of 365 days immediately preceding such day, there shall have been at
least one period of not less than 45 consecutive days during which on each day
of such period the aggregate Current Debt of all such Persons did not exceed the
amount of additional Funded Debt in favor of a Person other than a Subsidiary
that the Company would have been permitted to have outstanding (but did not have
outstanding) if the Company were required to maintain a Leverage Ratio of not
more than 0.5 to 1.0 on such day.
6B. Dividends and Prepayments on Subordinated Debt.
(i) Limit on Dividends and Other Distributions. The
Company will not declare or pay any dividends (whether in cash or
other Property), purchase, redeem, retire or otherwise acquire for
value any of its capital stock (or any warrants, rights or options
to acquire any shares of such capital stock) now or hereafter
outstanding, or make any other distribution of Property to its
stockholders, or permit any of its Subsidiaries to purchase or
otherwise acquire for value any capital stock of the Company if:
(a) after giving effect to such dividend,
distribution or other payment, the aggregate amount of
all such dividends, distributions and other payments
exceeds $2,750,000 during any fiscal year, or
(b) at the time of the declaration of such
dividend, distribution or other payment, and immediately
before, and after giving effect to the payment thereof,
an Event of Default exists or would exist.
(ii) No Subordinated Debt Prepayments. The Company will
not at any time, and will not at any time permit any Subsidiary to,
make any prepayments, directly or indirectly, of principal on, or
redeem, repurchase or retire, any existing or future Subordinated
Debt of the Company or any Subsidiary.
6C. Liens, Debt, and Other Restrictions.
6C(1) Liens.
<PAGE>
(i) Negative Pledge. The Company will not, and will not
permit any Subsidiary to, cause or permit to exist, or agree or
consent to cause or permit to exist in the future (upon the
happening of a contingency or otherwise), any of its Property,
whether now owned or hereafter acquired, to be subject to any Lien
except:
(a) Taxes, etc. -- Liens securing Property
taxes, assessments or governmental charges or levies
or the claims or demands of materialmen, mechanics,
carriers, warehousemen, vendors, landlords and other
like Persons, so long as
(I) the payment thereof is being
actively contested in good faith and by
appropriate proceedings and adequate book
reserves have been established and
maintained and exist with respect thereto,
and
(II) the title of the Company or
the Subsidiary, as the case may be, to, and
its right to use, such Property, is not
materially adversely affected thereby;
(b) Judicial Liens -- Liens
(I) arising from judicial
attachments and judgments,
(II) securing appeal bonds or
supersedeas bonds, and
(III) arising in connection with
court proceedings (including, without
limitation, surety bonds and letters of
credit or any other instrument serving a
similar purpose),
provided that (A) the execution or other enforcement of
such Liens is effectively stayed, (B) the claims secured
thereby are being actively contested in good faith and
by appropriate proceedings, (C) adequate book reserves
shall have been established and maintained and shall
exist with respect thereto and (D) the aggregate amount
so secured shall not at any time exceed $2,000,000;
(c) Ordinary Course Business Liens -- Liens
incurred or deposits made in the ordinary course of
business
(I) in connection with workers'
compensation, unemployment insurance, social
security and other like laws, and
<PAGE>
(II) to secure the performance
of letters of credit, bids, tenders, sales
contracts, leases, statutory obligations,
surety and performance bonds (of a type
other than set forth in paragraph
6C(1)(i)(b) hereof) and other similar
obligations not incurred in connection with
the borrowing of money, the obtaining of
advances or the payment of the deferred
purchase price of Property;
provided, however, that all such Liens do not, in the
aggregate, materially detract from the value of such
Property or materially interfere with the use of such
Property in the ordinary conduct of the business of the
Company and the Subsidiaries, taken as a whole;
(d) Certain Encumbrances -- Liens in the
nature of reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions,
restrictions, leases and other similar title exceptions
or encumbrances affecting real Property, provided that
such exceptions and encumbrances do not in the aggregate
materially detract from the value of such Properties or
materially interfere with the use of such Property in
the ordinary conduct of the business of the Company and
the Subsidiaries, taken as a whole;
(e) Intergroup Liens -- Liens on Property of
a Subsidiary, provided that such Liens secure only
obligations owing to the Company;
(f) Closing Date Liens --
(I) Liens in existence on the
Date of Closing securing Indebtedness,
provided that such Liens and such
Indebtedness are described in Part
6C(1)(i)(f) of Annex 4 hereto; and
(II) Liens securing renewals,
extensions (as to time) and refinancings of
Indebtedness secured by the Liens described
in Part 6C(1)(i)(f) of Annex 4 hereto,
provided that
(A) the amount of
Indebtedness secured by each
such Lien is not increased in
excess of the amount of such
Indebtedness outstanding on the
date of such renewal, extension
or refinancing, unless the
aggregate amount of Indebtedness
in excess of such outstanding
Indebtedness is permitted to be
outstanding under the terms and
provisions of paragraph
6C(2)(ii) hereof,
<PAGE>
(B) none of such
Liens is extended to encumber or
otherwise relate to or cover any
additional Property of the
Company or any Subsidiary, and
(C) immediately
prior to, and immediately after
the consummation of such
renewal, extension or
refinancing, and after giving
effect thereto, no Default or
Event of Default exists or would
exist; and
(g) Secured Indebtedness -- other Liens on
Property of the Company or the Subsidiaries as specified
in paragraph 6C(2)(ii) hereof securing Indebtedness
permitted pursuant to paragraph 6C(2)(ii) hereof.
(ii) Financing Statements. The Company will not, and
will not permit any Subsidiary to, sign or file a financing
statement under the Uniform Commercial Code of any jurisdiction that
names the Company or such Subsidiary as debtor, or sign any security
agreement authorizing any secured party thereunder to file any such
financing statement, except, in any such case, a financing statement
filed or to be filed to perfect or protect a security interest that
the Company or such Subsidiary is entitled to create, assume or
incur, or permit to exist, under the foregoing provisions of this
paragraph 6C(1) or to evidence for informational purposes a lessor's
interest in Property leased to the Company or any such Subsidiary.
6C(2) Limitations on Indebtedness.
(i) Limitation on Indebtedness. The Company will not,
and will not permit any Subsidiary to, create, incur, assume or
suffer to exist any Indebtedness or other liabilities or
obligations, whether matured or unmatured, liquidated or
unliquidated, direct or contingent, or joint or several, except:
(a) liabilities of the Company in respect of
the Notes, this Agreement and the Bank Credit Agreement,
and liabilities of any Subsidiary in respect of any
Guaranty of the obligations of the Company under the
Notes, this Agreement or the Bank Credit Agreement;
(b) long-term Indebtedness, provided the
Company complies with the provisions of paragraph
6A(3) hereof;
(c) Indebtedness secured by Liens permitted
to be outstanding pursuant to paragraph 6C(2)(ii)
hereof;
(d) unsecured short-term Indebtedness of the
Company incurred for the purpose of funding the working
capital requirements of the Company and the
Subsidiaries, provided the Company complies with the
provisions of paragraph 6A(5) hereof;
<PAGE>
(e) Indebtedness of Subsidiaries, provided
the Company complies with the provisions of
paragraph 6C(2)(iii) hereof; and
(f) those liabilities listed in Part 6C(2)(i) of Annex 4 hereto.
(ii) Limitation on Secured Indebtedness. The Company
will not, and will not permit any Subsidiary to, create, incur,
assume or suffer to exist any Indebtedness or other liabilities or
obligations, whether matured or unmatured, liquidated or
unliquidated, direct or contingent, or joint or several, which are
secured by, or have the benefit of, any Lien except Indebtedness
secured by or having the benefit of, or in respect of:
(a) Liens outstanding on the Closing Date
described in Part 6C(1)(a)(vi) of Annex 4 hereto;
(b) purchase money Liens or purchase money
security interests upon or in any fixed assets acquired
or held by the Company or any Subsidiary in the ordinary
course of business to secure the purchase price of such
fixed assets or to secure Indebtedness incurred solely
for the purpose of financing the acquisition of such
fixed assets;
(c) Liens or security interests existing on
fixed assets at the time of their acquisition;
(d) Liens and security interests on
previously acquired fixed assets, the Fair Market Value
of which assets does not exceed by more than 100% the
amount of Indebtedness secured thereby, all as
determined by the Required Holders, in their sole, good
faith discretion; or
(e) Liens in respect of obligations for
Capital Leases of real or personal fixed assets acquired
or held by the Company in the ordinary course of
business which are secured only by the fixed assets that
are the subject of such Capital Lease,
provided, however, that (I) the aggregate amount of any Indebtedness
incurred in connection with renewals, extensions (as to time) and
refinancings of Indebtedness described in Part 6C(1)(i)(f) of Annex
4 hereto in excess of the amount of such Indebtedness outstanding
immediately prior to each such renewal, extension or refinancing,
plus (II) the aggregate principal amount of the Indebtedness secured
by the Liens or security interests referred to in clause (b), clause
(c) and clause (d) of this paragraph 6C(2)(ii), plus (z) the
aggregate amount of capitalized payment obligations under the
Capital Leases specified in clause (e) of this paragraph 6C(2)(ii)
shall not at any time exceed $25,000,000.
(iii) Limitation on Subsidiary Indebtedness. The Company
shall not at any time permit Total Subsidiary Indebtedness to exceed
10% of Consolidated Indebtedness at such time. As used herein:
"Total Subsidiary Indebtedness" -- means, at any time
(without duplication),
<PAGE>
(a) the aggregate Indebtedness of all
Subsidiaries outstanding at such time, plus
(b) the aggregate amount of claims in
respect of the redemption of, and accumulated unpaid
dividends on, all preferred stock (and other equity
Securities and all other Securities convertible into,
exchangeable for, or representing the right to purchase,
preferred stock) of all Subsidiaries outstanding at such
time (whether or not any right of redemption or
conversion is exercisable by the holder thereof at such
time), determined, in each case, on a combined basis for
such Persons,
but excluding from such calculation (i) any such Indebtedness of any
Subsidiary in respect of any Guaranty of the Notes provided pursuant
to, and in accordance with the provisions of, paragraph 5I hereof,
(ii) any such Indebtedness of any Subsidiary in respect of any
Guaranty of any of the obligations of the Company under (A) the Bank
Credit Agreement, and (B) any other primary Indebtedness of the
Company, so long as, in each such case, such Subsidiary has entered
into a Guaranty of the obligations of the Company under the Notes
and this Agreement and, except as provided in the next sentence, the
beneficiary of any such Guaranty shall have entered into an
intercreditor agreement acceptable to the Required Holders, (iii)
any such Indebtedness of any Subsidiary existing on the Date of
Closing which is described in Part 6C(2)(iii) of Annex 4 hereto, and
(iv) all such preferred stock and other equity Securities which are
legally and beneficially owned by the Company. Notwithstanding
clause (ii) of the preceding sentence, "Total Subsidiary
Indebtedness" shall not include the Indebtedness of Subsidiaries
represented by Guaranties where the beneficiaries of such Guaranties
have not entered into such an intercreditor agreement so long as the
fair market value of the aggregate Counted Assets of all such
Subsidiaries issuing Guaranties does not exceed 10% of the
consolidated net worth of the Company and its Subsidiaries
determined in accordance with GAAP.
"Counted Assets" -- means all assets of any Subsidiary other than
(i) $150,000,000 9-1/2% County of Henderson, Kentucky Taxable
Industrial Building Revenue Bonds Series 1996 (Hudson Foods, Inc.
Project) due February 1, 2020, (ii) $12,000,000 9-1/2% County of
McLean, Kentucky Taxable Industrial Building Revenue and Revenue
Refunding Bonds, Series 1996 (Hudson Foods, Inc. Project) due
February 1, 2020, and (iii) $18,000,000 9-1/2% County of Webster,
Kentucky Taxable Industrial Building Revenue and Revenue Refunding
Bonds, Series 1996 (Hudson Foods, Inc. Project) due February 1,
2020.
"Consolidated Indebtedness" -- means, at any time, the aggregate
amount of Indebtedness of the Company and the Subsidiaries,
determined on a consolidated basis for such Persons at such time in
accordance with GAAP.
<PAGE>
(iv) Loans, Guaranties, etc. The Company will not, and
will not permit any Subsidiary to, make any loans or advances to or
investments in any Person, or directly or indirectly enter into any
Guaranty or otherwise assure a creditor against loss in respect of
any Indebtedness or other obligations or liabilities (contingent or
otherwise) of any Person unless any such amounts have been included
as Indebtedness in making calculations with respect to each
representation, warranty and covenant set forth in this Agreement.
6C(3). Restricted Investments. The Company will not at any time, and will
not at any time permit any Subsidiary to, make any investments (including,
without limitation, loans or other advances to or for the benefit of any
Subsidiary) except:
(i) investments in readily marketable obligations of
the United States of America maturing within one year from date of
purchase,
(ii) investments in prime (by recognized United States
financial standards) commercial paper maturing within one year from
date of purchase,
(iii) investments in fully insured domestic certificates
of deposit and certificates of deposit issued by any Bank (provided
such Bank's outstanding long-term debt securities are rated at least
"A" by Standard & Poor's (a division of McGraw-Hill, Inc.) or at
least "A-1" by Moody's Investors Service, Inc.) maturing within one
year from the date of creation thereof,
(iv) endorsements of negotiable instruments for
collection in the ordinary course of business,
(v) investments in Subsidiaries that have complied with
the requirements of paragraph 5I hereof, and
(vi) other investments so long as the aggregate book
value of all such investments does not at any time exceed 10% of
Tangible Net Worth at such time;
provided, however, that this paragraph 6C(3) shall not be deemed to prohibit the
Company from creating accounts receivable owing from any Subsidiary as a result
of the sale of inventory in accordance with paragraph 6D hereof.
6C(4) Merger, Consolidation, Transfers of Property, etc.
(i) Merger and Consolidation. The Company will not, and
will not permit any Subsidiary to, merge with or into or consolidate
with any other Person or permit any other Person to merge or
consolidate with or into it (except that a Subsidiary may merge into
or consolidate with the Company or a Wholly-Owned Subsidiary),
provided that the foregoing restriction does not apply to the merger
or consolidation of the Company with another corporation if:
(a) the Company is the corporation that
results from such merger or consolidation (the
"Surviving Corporation");
<PAGE>
(b) the due and punctual payment of the
principal of and Yield-Maintenance Amount, if any, and
interest on all of the Notes, according to their tenor,
and the due and punctual performance and observance of
all the covenants in the Notes and this Agreement to be
performed or observed by the Company are expressly
assumed by the Surviving Corporation pursuant to such
agreements and instruments as shall be approved by the
Required Holders, and the Company causes to be delivered
to each holder of Notes an opinion of independent
counsel to the effect that such agreements and
instruments are enforceable in accordance with their
terms (subject to customary qualifications); and
(c) immediately prior to, and immediately
after the consummation of the transaction, and after
giving effect thereto, no Default or Event of Default
exists or would exist.
(ii) Acquisition of Stock, etc. The Company will not,
and will not permit any Subsidiary to, acquire any stock of any
corporation if upon completion of such acquisition such corporation
would be a Subsidiary, or acquire all of the Property of, or such of
the Property as would permit the transferee to continue any one or
more integral business operations of, any Person unless, immediately
prior to, and immediately after the consummation of such
acquisition, and after giving effect thereto, no Default or Event of
Default exists or would exist.
(iii) Transfers of Property. The Company will not, and will not permit any
Subsidiary to, sell, lease as lessor, transfer or otherwise dispose of any
Property (collectively, "Transfers"), except Transfers of inventory and
Transfers of other Property for Fair Market Value, in each case in the ordinary
course of business of the Company or any such Subsidiary.
6C(5). Operating Lease Rentals. The Company will not create or suffer to
exist, or permit any of the Subsidiaries to create or suffer to exist, any
obligations for the payment of rent for any Property under leases or agreements
to lease, which do or would constitute Operating Leases, which in the aggregate
have annual rental payments for any fiscal year in excess of 7.5% of Net
Tangible Assets determined at the end of such fiscal year; provided, however,
that leases for rolling stock shall be excluded from the foregoing calculation.
As used herein:
"Net Tangible Assets" -- means total assets minus
Intangible Assets minus current liabilities (exclusive of current
deferred taxes) of the Company and the Subsidiaries, in each case as
would appear on a consolidated balance sheet for such Persons
prepared in accordance with GAAP.
6D. Transactions with Affiliates. The Company will not, and will not permit
any Subsidiary to, enter into any transaction, including, without limitation,
the purchase, sale or exchange of Property or the rendering of any service, with
any Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of the Company's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such Subsidiary than would
obtain in a comparable arm's-length transaction with a Person not an Affiliate.
6E. Capital Expenditures. The Company will not, and will not permit any
Subsidiary to, make any Capital Expenditures, if:
<PAGE>
(i) the aggregate amount of Capital Expenditures of the
Company and the Subsidiaries, determined on a consolidated basis for
such Persons in accordance with GAAP, in any one fiscal year would
be in excess of 25% of stockholder's equity of the Company and the
Subsidiaries as would appear on a consolidated balance sheet
prepared in accordance with GAAP for such Persons as at the end of
the fiscal year then most recently ended; provided, however, that
(a) the amount of Capital Expenditures
incurred in fiscal year 1996 and fiscal year 1997 of the
Company in connection with the Company's planned
construction of a new processing facility in the state
of Kentucky, and
(b) the portion of any purchase price in
respect of any Capital Expenditure which was paid for by
the Company solely with shares of the Company's capital
stock,
shall be excluded from the application of this covenant; or
(ii) at the time of such Capital Expenditure, and
immediately before and after giving effect thereto, a Default or an
Event of Default exists or would exist. As used herein:
"Capital Expenditure" -- means, with respect to any
Person, any payments in respect of the acquisition or construction
cost of Property (including, without limitation, (x) the purchase
price of tangible assets acquired by such Person and (y) the gross
purchase price of assets or stock, as the case may be, acquired by
such Person in connection with any merger, consolidation, asset
acquisition, stock purchase or similar transaction entered into by
such Person) or other expenditures in respect of Property, in each
case that is, or is part of a group of related items of Property
substantially all of which are, required to be classified as
long-term assets on a balance sheet of such Person prepared in
accordance with GAAP.
6F. Nature of Business. The Company will not, and will not permit any
Subsidiary to, engage in any business if, as a result thereof, the principal
businesses of the Company and the Subsidiaries, taken as a whole, would not be
substantially the same as the businesses described in the Most Recent 10-K.
6G. ERISA.
(i) Compliance. The Company will, and will cause each
ERISA Affiliate to, at all times with respect to each Pension Plan,
make timely payment of contributions required to meet the minimum
funding standard set forth in ERISA or the Code with respect
thereto, and to comply with all other applicable provisions of
ERISA.
(ii) Relationship of Vested Benefits to Pension Plan
Assets. The Company will not at any time permit the present value of
all employee benefits vested under each Pension Plan to exceed the
assets of such Pension Plan allocable to such vested benefits at
such time, in each case determined pursuant to paragraph 6G(iii)
hereof.
<PAGE>
(iii) Valuations. All assumptions and methods used to
determine the actuarial valuation of vested employee benefits under
Pension Plans and the present value of assets of Pension Plans will
be reasonable in the good faith judgment of the Company and will
comply with all requirements of law.
(iv) Prohibited Actions. The Company will not, and will
not permit any ERISA Affiliate to:
(a) engage in any "prohibited transaction"
(as such term is defined in section 406 of ERISA or
section 4975 of the Code) that would result in the
imposition of a material tax or penalty;
(b) incur with respect to any Pension Plan
any "accumulated funding deficiency" (as such term is
defined in section 302 of ERISA), whether or not waived;
(c) terminate any Pension Plan in a manner
that could result in
(I) the imposition of a Lien
on the Property of the Company or any
Subsidiary pursuant to section 4068 of
ERISA, or
(II) the creation of any
liability under section 4062 of ERISA;
(d) fail to make any payment required by
section 515 of ERISA; or
(e) at any time be an "employer" (as such
term is defined in section 3(5) of ERISA) required to
contribute to any Multiemployer Plan if, at such time,
it could reasonably be expected that the Company or any
Subsidiary will incur withdrawal liability in respect of
such Multiemployer Plan and such liability, if incurred,
together with the aggregate amount of all other
withdrawal liability as to which there is a reasonable
expectation of incurrence by the Company or any
Subsidiary under any one or more Multiemployer Plans,
could reasonably be expected to have a Material Adverse
Effect.
6H. Private Offering. The Company will not, and will not permit any Person
acting on its behalf to, offer the Notes or any part thereof or any similar
Securities for issuance or sale to, or solicit any offer to acquire any of the
same from, any Person so as to bring the issuance and sale of the Notes within
the provisions of section 5 of the Securities Act.
6I. Certain Accounting Matters. The Company will not, at any time, (a)
change its methods of accounting, unless required in accordance with GAAP, or
(b) change its fiscal year.
PARAGRAPH 7. EVENTS OF DEFAULT.
7. Events of Default.
<PAGE>
7A. Acceleration. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) Principal or Yield-Maintenance Amount Payments --
the Company shall fail to make any payment of principal or
Yield-Maintenance Amount on any Note on or before the date such
payment is due;
(ii) Interest Payments -- the Company shall fail to
make any payment of interest on any Note on or before the date such
payment is due;
(iii) Certain Defaults -- the Company or any Subsidiary
shall fail to perform or observe any covenant contained in paragraph
5F, 5G(ii), 5A(i) through (viii), inclusive, or 5(A)(xi) through
(xiii), inclusive, and such failure continues for more than 10 days
after the earlier of (i) receipt by the Company of written notice
thereof from any Purchaser or any other holder of Notes, or (ii)
such time as such failure shall otherwise first become known to any
officer of the Company;
(iv) Other Defaults -- the Company or any Subsidiary
shall fail to perform, observe or comply with any other term,
covenant or agreement contained in this Agreement, in the Notes or
in any other document or instrument delivered in connection herewith
required to be performed by the Company or such Subsidiary pursuant
to the terms of this Agreement, of the Notes or of such other
document or instrument;
(v) Warranties or Representations -- any warranty,
representation or other statement by or on behalf of the Company (or
any of its officers) contained herein or in any certificate or
instrument furnished in compliance with or in reference hereto, or
by any Subsidiary in any Subsidiary Guaranty, shall have been false
or misleading in any material respect when made;
(vi) Cross Default --
(a) the Company or any Subsidiary shall fail
to make any payment on any Indebtedness or any
Security when due;
(b) any event shall occur or any condition
shall exist in respect of any Indebtedness or any
Security of the Company or any Subsidiary, or under any
agreement securing or relating to any such Indebtedness
or Security, that immediately or with any one or more of
the passage of time or the giving of notice:
(I) causes (or permits any
holder thereof or a trustee therefor to
cause) such Indebtedness or Security, or a
portion thereof, to become due prior to its
stated maturity or prior to its regularly
scheduled date or dates of payment; or
<PAGE>
(II) permits any one or more of
the holders thereof or a trustee therefor to
require the Company or any Subsidiary to
repurchase such Indebtedness or Security
from such holder and any such holder or
trustee exercises (or attempts to exercise)
such right; or
(c) any "Event of Default" shall have
occurred or shall exist under, and as defined in, the
Bank Credit Agreement, as amended and as in effect at
such time;
(vii) Involuntary Bankruptcy Proceedings --
(a) a receiver, liquidator, custodian or
trustee of the Company or any Subsidiary, or of all or
any part of the Property of any such Person, shall be
appointed by court order and such order shall remain in
effect for more than 30 days, or an order for relief
shall be entered with respect to the Company or any
Subsidiary, or the Company or any Subsidiary shall be
adjudicated a bankrupt or insolvent;
(b) any of the Property of the Company or
any Subsidiary shall be sequestered by court order and
such order shall remain in effect for more than 30 days;
or
(c) a petition shall be filed against the
Company or any Subsidiary under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, and
shall not be dismissed within 30 days after such filing;
(viii) Voluntary Petitions -- the Company or any
Subsidiary shall file a petition in voluntary bankruptcy or seeking
relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in
effect, or shall consent to, or take any corporate action to
authorize, the filing of any petition against, or with respect to,
any such Person, under any such law;
(ix) Assignments for Benefit of Creditors, etc. -- the
Company or any Subsidiary shall make an assignment for the benefit
of its creditors, or admit in writing its inability, or fail, to pay
its debts generally as they become due, or shall consent to the
appointment of a receiver, liquidator or trustee of the Company or
any Subsidiary or of all or any part of the Property of any such
Person;
(x) Undischarged Final Judgments -- a final,
nonappealable judgment or final, nonappealable judgments for the
payment of money aggregating in excess of $2,000,000 is or are
outstanding against any one or more of the Company or any Subsidiary
and any one of such judgments shall have been outstanding for more
than 10 days from the date of its entry and shall not have been
discharged in full or stayed; or
<PAGE>
(xi) Subsidiary Guaranty --
(a) any Subsidiary Guaranty shall cease to
be in full force and effect or shall be declared by a
court or Governmental Authority of competent
jurisdiction to be void, voidable or unenforceable
against the Subsidiary which is a guarantor thereunder;
(b) the validity or enforceability of any
Subsidiary Guaranty against the Subsidiary which is a
guarantor thereunder shall be contested by such
Subsidiary, or any subsidiary or affiliate thereof; or
(c) any Subsidiary, or any subsidiary or
affiliate thereof, shall deny that such Subsidiary has
any further liability or obligation under the Subsidiary
Guaranty to which such Subsidiary is a party;
<PAGE>
then (a) if such event is an Event of Default specified in clause (i) or (ii) of
this paragraph 7A, the holder of any Note (other than the Company or any of its
Subsidiaries or Affiliates) may at its option, by notice in writing to the
Company, declare such Note to be, and such Note shall thereupon be and become,
immediately due and payable at par together with interest accrued thereon,
without presentment, demand, protest or other notice of any kind (including,
without limitation, notice of intent to accelerate), all of which are hereby
waived by the Company, (b) if such event is an Event of Default specified in
clause (vii), (viii) or (ix) of this paragraph 7A with respect to the Company,
all of the Notes at the time outstanding shall automatically become immediately
due and payable together with interest accrued thereon and together with the
Yield-Maintenance Amount, if any, with respect to each Note, without
presentment, demand, protest or notice of any kind (including, without
limitation, notice of intent to accelerate and notice of acceleration of
maturity), all of which are hereby waived by the Company, and (c) if such event
is not an Event of Default specified in clause (vii), (viii) or (ix) of this
paragraph 7A with respect to the Company, the Required Holder(s) may at its or
their option, by notice in writing to the Company, declare all of the Notes to
be, and all of the Notes shall thereupon be and become, immediately due and
payable together with interest accrued thereon and together with the
Yield-Maintenance Amount, if any, with respect to each Note, without
presentment, demand, protest or other notice of any kind (including, without
limitation, notice of intent to accelerate), all of which are hereby waived by
the Company.
The Company acknowledges, and the parties hereto agree, that each
holder of a Note has the right to maintain its investment in the Notes free from
repayment by the Company (except as herein specifically provided for) and that
the provision for payment of the Yield-Maintenance Amount by the Company in the
event that the Notes are prepaid or are accelerated as a result of an Event of
Default, is intended to provide compensation for the deprivation of such right
under such circumstances.
7B. Rescission of Acceleration. At any time after any or all of the Notes
shall have been declared immediately due and payable pursuant to paragraph 7A,
the Required Holder(s) may, by notice in writing to the Company, rescind and
annul such declaration and its consequences if (i) the Company shall have paid
all overdue interest on the Notes, the principal of and Yield-Maintenance
Amount, if any, payable with respect to any Notes which have become due
otherwise than by reason of such declaration, and interest on such overdue
interest and overdue principal and Yield-Maintenance Amount at the rate
specified in the Notes, (ii) the Company shall not have paid any amounts which
have become due solely by reason of such declaration, (iii) all Events of
Default and Defaults, other than non-payment of amounts which have become due
solely by reason of such declaration, shall have been cured or waived pursuant
to paragraph 11C, and (iv) no judgment or decree shall have been entered for the
payment of any amounts due pursuant to the Notes or this Agreement. No such
rescission or annulment shall extend to or affect any subsequent Event of
Default or Default or impair any right arising therefrom.
7C. Notice of Acceleration or Rescission. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
at the time outstanding.
<PAGE>
7D. Other Remedies. If any Event of Default or Default shall occur and be
continuing, the holder of any Note may proceed to protect and enforce its rights
under this Agreement and such Note by exercising such remedies as are available
to such holder in respect thereof under applicable law, either by suit in equity
or by action at law, or both, whether for specific performance of any covenant
or other agreement contained in this Agreement or in aid of the exercise of any
power granted in this Agreement. No remedy conferred in this Agreement upon the
holder of any Note is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy conferred herein or now or hereafter existing at law or in equity or by
statute or otherwise.
PARAGRAPH 8. REPRESENTATIONS, COVENANTS AND WARRANTIES.
8. Representations, Covenants and Warranties. The Company represents,
covenants and warrants as follows:
8A. Corporate Organization and Authority. Each of the Company and the
Subsidiaries: Authority.
(i) is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of
incorporation;
(ii) has all legal and corporate power and authority to
own and operate its Properties and to carry on its business as now
conducted and as presently proposed to be conducted;
(iii) has all licenses, certificates, permits,
franchises and other governmental authorizations necessary to own
and operate its Properties and to carry on its business as now
conducted and as presently proposed to be conducted, except where
the failure to have such licenses, certificates, permits, franchises
and other governmental authorizations, in the aggregate for all such
failures, could not reasonably be expected to have a Material
Adverse Effect; and
(iv) has duly qualified or has been duly licensed, and
is authorized to do business and is in good standing, as a foreign
corporation, in each state (each of which states is listed in Part
8A(iv) of Annex 3 hereto) where the failure to be so qualified or
licensed and authorized and in good standing, in the aggregate for
all such failures, could reasonably be expected to have a Material
Adverse Effect.
8B. Financial Statements; Indebtedness; Material Adverse Change.
(i) Financial Statements. The Company has provided each
Purchaser with its financial statements described in Part 8B(i) of
Annex 3 hereto. Such financial statements have been prepared in
accordance with GAAP consistently applied, and present fairly, in
all material respects, the financial position of the Company and its
consolidated subsidiaries as of such dates and the results of their
operations and cash flows for such periods. All such financial
statements include the accounts of all Subsidiaries of the Company
for the respective periods during which a Subsidiary relationship
has existed.
<PAGE>
(ii) Indebtedness. Part 8B(ii) of Annex 3 hereto lists
all Indebtedness of the Company and the Subsidiaries as of the
Closing Date, and provides the following information with respect to
each item of such Indebtedness:
(a) the holder thereof,
(b) the outstanding amount,
(c) the portion which is classified as
current under GAAP, and
(d) the collateral securing such
Indebtedness, if any.
(iii) Material Adverse Change. Since September 30, 1995,
there has been no change in the business, prospects, profits,
Properties or condition (financial or otherwise) of the Company or
any of the Subsidiaries, except changes in the ordinary course of
business that, in the aggregate for all such changes, could not
reasonably be expected to have a Material Adverse Effect.
(iv) Other Financial Information. All statements or
summaries of historical and pro forma financial condition and
performance of the Company and the Subsidiaries contained in the
Most Recent 10K or described in Part 8B(i) of Annex 3 have been in
all material respects prepared in accordance with GAAP, unless
otherwise expressly noted therein. All assumptions and estimates
upon which any statements of pro forma financial condition or
performance have been based are reasonable in light of the
circumstances existing at the time such assumptions and estimates
were made, based on the best information available to management of
the Company and the Subsidiaries at the time of the preparation
thereof. As of the Closing Date, and in light of the circumstances
existing on such date, such assumptions continue to be reasonable,
based on the best information available to the management of the
Company and the Subsidiaries.
8C. Nature of Business. The Most Recent 10-K (a copy of which previously
has been delivered to you), correctly describes the general nature of the
business and principal Properties of the Company and the Subsidiaries as of the
Closing Date.
8D. Subsidiaries and Affiliates. Part 8D of Annex 3 hereto sets forth (i)
the name of each of the Subsidiaries, its jurisdiction of incorporation and the
percentage of its Voting Stock owned by the Company and each other Subsidiary,
and (ii) a description of the Affiliates (other than individuals) and the nature
of their affiliation.
Each of the Company and the Subsidiaries has good and marketable title to
all of the shares it purports to own of the stock of each Subsidiary, free and
clear in each case of any Lien. All such shares have been duly issued and are
fully paid and nonassessable.
8E. Title to Properties; Leases; Patents, Trademarks, etc.
<PAGE>
(i) Each of the Company and the Subsidiaries has good
and marketable title to all of the real Property, and good title to
all of the other Property, reflected in the most recent balance
sheet referred to in paragraph 8B(i) hereof (except as sold or
otherwise disposed of in the ordinary course of business), except
where the failure to have such good and marketable title (a) is
immaterial to such financial statements, and (b) could not
reasonably be expected to have a Material Adverse Effect. All such
Property is free from Liens not permitted by paragraph 6C(i) hereof.
(ii) Each of the Company and the Subsidiaries has
complied with all material obligations under all leases to which it
is a party, except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect. All such
leases are in full force and effect and each of the Company and the
Subsidiaries enjoys peaceful and undisturbed possession under all
such leases.
(iii) Each of the Company and the Subsidiaries owns,
possesses or has the right to use all of the patents, trademarks,
service marks, trade names, copyrights and licenses, and rights with
respect thereto, necessary for the present and currently planned
future conduct of its business, without any known conflict with the
rights of others, except for such failures to own, possess, or have
the right to use, that, in the aggregate for all such failures,
could not reasonably be expected to have a Material Adverse Effect.
8F. Taxes.
(i) Returns Filed; Taxes Paid.
(a) All tax returns required to be filed by
the Company and each Subsidiary and any other Person
with which the Company or any Subsidiary files or has
filed a consolidated return in any jurisdiction have
been filed on a timely basis, and all taxes,
assessments, fees and other governmental charges upon
the Company, such Subsidiary and any such Person, and
upon any of their respective Properties, income or
franchises, that are due and payable have been paid,
except for such tax returns and such tax payments which
are being contested in good faith and which could not,
in the aggregate for all such tax returns and payments,
reasonably be expected to have a Material Adverse
Effect.
(b) All liabilities of each of the Company,
the Subsidiaries and the other Persons referred to in
the preceding clause (i) with respect to federal income
taxes have been finally determined except for the fiscal
years set forth in 8F(I) of Annex 3 hereto, the only
years not closed by the completion of an audit or the
expiration of the statute of limitations.
(ii) Book Provisions Adequate.
<PAGE>
(a) The amount of the liability for taxes
reflected in each of the balance sheets referred to in
paragraph 8B(i) hereof is in each case an adequate
provision for taxes as of the dates of such balance
sheets (including, without limitation, any payment due
pursuant to any tax sharing agreement) as are or may
become payable by any one or more of the Company and the
other Persons consolidated with the Company in such
financial statements in respect of all tax periods
ending on or prior to such dates.
(b) The Company does not know of any
proposed additional tax assessment against it or any
such Person that is not reflected in full in the most
recent balance sheet referred to in paragraph 8B(i)
hereof.
8G. Pending Litigation.
(i) There are no proceedings, actions or investigations
pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Subsidiary in any court or before any
Governmental Authority or arbitration board or tribunal that, in the
aggregate for all such proceedings, actions and investigations,
could reasonably be expected to have a Material Adverse Effect.
(ii) Neither the Company nor any Subsidiary is in
default with respect to any judgment, order, writ, injunction or
decree of any court, Governmental Authority, arbitration board or
tribunal that, in the aggregate for all such defaults, could
reasonably be expected to have a Material Adverse Effect.
8H. Full Disclosure. The financial statements referred to in paragraph
8B(i) hereof do not, nor does this Agreement, the Most Recent 10-K or any
statement furnished by or on behalf of the Company to you in connection with the
negotiation or any closing of any sale of the Notes, contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained therein and herein not misleading. There is no fact that
the Company has not disclosed to you in writing that has had or, so far as the
Company can now reasonably foresee, could reasonably be expected to have a
Material Adverse Effect.
8I. Charter Instruments, Other Agreements, etc.
<PAGE>
(i) Charter Instruments. Neither the Company nor any
Subsidiary is in violation in any respect of any term of any
charter instrument or bylaw.
(ii) Agreements Relating to Indebtedness. Neither the
Company nor any Subsidiary is in violation of any term in, and no
default or event of default exists under, any agreement or other
instrument to which it is a party or by which it or any of its
Properties may be bound relating to, or providing the terms of, any
Indebtedness specified in Part 8B(ii) of Annex 3 hereto having a
principal or stated amount equal to or in excess of $250,000.
(iii) Other Agreements. Neither the Company nor any
Subsidiary is in violation of any term in, and no default or event
of default exists under, any agreement or other instrument to which
it is a party or by which it or any of its Properties may be bound
(other than the agreements and other instruments specified in clause
(ii) of this paragraph 8I), which, in the aggregate for all such
violations, could reasonably be expected to have a Material Adverse
Effect.
8J. Restrictions on Company and Subsidiaries. Neither the Company nor any
Subsidiary:and Subsidiaries.
(i) is a party to any contract or agreement, or subject
to any charter or other corporate restriction that, in the aggregate
for all such contracts, agreements, charters and corporate
restrictions, could reasonably be expected to have a Material
Adverse Effect;
(ii) is a party to any contract or agreement that
restricts the right or ability of such corporation to incur
Indebtedness, other than this Agreement and the agreements listed in
Part 8J(ii) of Annex 3 hereto, none of which restricts the issuance
and sale of the Notes or the performance by the Company of its
obligations under this Agreement or under the Notes; or
(iii) has agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any of its
Property, whether now owned or hereafter acquired, to be subject to
a Lien not permitted by paragraph 6C(1) hereof.
True, correct and complete copies of each of the agreements listed
<PAGE>
in Part 8J(ii) of Annex 3 hereto have been provided to you and your counsel.
8K. Compliance with Law. Neither the Company nor any Subsidiary is in
violation of any law, ordinance, governmental rule or regulation to which it is
subject, which violations, in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
8L. ERISA.
(i) Prohibited Transactions. Neither the execution of
this Agreement, the purchase of the Notes by you nor the
consummation of the transactions contemplated by this Agreement will
constitute a "prohibited transaction" (as such term is defined in
section 406(a) of ERISA) or result in a tax under section 4975 of
the Code. The representation by the Company in the preceding
sentence is made in reliance upon your respective representations in
paragraph 9B hereof as to the source of funds to be used by you to
purchase the Notes.
(ii) Pension Plans.
(a) Compliance with ERISA. The Company and
the ERISA Affiliates are in compliance with ERISA,
except for such failures to comply that, in the
aggregate for all such failures, could not reasonably be
expected to have a Material Adverse Effect.
(b) Funding Status; Relationship of Vested
Benefits to Pension Plan Assets.
(I) No "accumulated funding
deficiency" (as defined in section 302 of
ERISA and section 412 of the Code), whether
or not waived, exists with respect to any
Pension Plan.
(II) The present value of all
benefits, determined as of the most recent
valuation date for such benefits as provided
in paragraph 6G hereof, vested under each
Pension Plan does not exceed the value of
the assets of such Pension Plan allocable to
such vested benefits, determined as of such
date as provided in paragraph 6G hereof.
<PAGE>
(c) PBGC. No liability to the PBGC has been
or is expected to be incurred by the Company or any
ERISA Affiliate with respect to any Pension Plan that,
individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. No
circumstance exists that constitutes grounds under
section 4042 of ERISA entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to
administer, any Pension Plan or trust created
thereunder, nor has the PBGC instituted any such
proceeding.
(d) Multiemployer Plans. Neither the Company
nor any ERISA Affiliate has incurred or presently
expects to incur any withdrawal liability under Title IV
of ERISA with respect to any Multiemployer Plan. There
have been no "reportable events" (as such term is
defined in section 4043 of ERISA) with respect to any
Multiemployer Plan that could result in the termination
of such Multiemployer Plan and give rise to a liability
of the Company or any ERISA Affiliate in respect
thereof.
(iii) Disclosure. Part 8L(iii) of Annex 3 sets forth all
ERISA Affiliates and all "employee benefit plans" with respect to
which the Company or any "affiliate" of the Company is a
"party-in-interest" or in respect of which the Notes could
constitute an "employer security" ("employee benefit plan" and
"party-in-interest" having the meanings specified in section 3 of
ERISA and "affiliate" and "employer security" having the meanings
specified in section 407(d) of ERISA).
8M. Certain Laws.
(i) Environmental Protection Laws.
(a) Compliance. Each of the Company and the
Subsidiaries is in compliance with all Environmental
Protection Laws in effect in each jurisdiction where it
is presently doing business and in which the failure so
to comply, in the aggregate for all such failures, could
reasonably be expected to have a Material Adverse
Effect.
<PAGE>
(b) Liability. Neither the Company nor any
Subsidiary is subject to any liability under any
Environmental Protection Law that, in the aggregate for
all such liabilities, could reasonably be expected to
have a Material Adverse Effect.
(c) Notices. Neither the Company nor any
Subsidiary has received any:
(I) notice from any Governmental
Authority by which any of its present or
previously-owned or leased Properties has
been identified in any manner by any
Governmental Authority as a hazardous
substance disposal or removal site, "Super
Fund" clean-up site or candidate for removal
or closure pursuant to any Environmental
Protection Law;
(II) notice of any Lien arising
under or in connection with any
Environmental Protection Law that has
attached to any revenues of, or to, any of
its owned or leased Properties; or
(III) communication, written or
oral, from any Governmental Authority
concerning any action or omission by the
Company or such Subsidiary in connection
with its ownership or leasing of any
Property resulting in the release of any
Hazardous Substance or resulting in any
violation of any Environmental Protection
Law;
where the effect of which, in the aggregate for all such
notices and communications, could reasonably be expected
to have a Material Adverse Effect.
(ii) Health Laws.
(a) Compliance. Each of the Company and the
Subsidiaries is in compliance with all Health Laws in
<PAGE>
effect in each jurisdiction where it is presently doing
business and in which the failure so to comply, in the
aggregate for all such failures, could reasonably be
expected to have a Material Adverse Effect.
(b) Liability. Neither the Company nor any
Subsidiary is subject to any liability under any Health
Law that, in the aggregate for all such liabilities,
could reasonably be expected to have a Material Adverse
Effect.
(c) Notices. Neither the Company nor any
Subsidiary has received any notice from any Governmental
Authority concerning any actual or alleged violation of
any Health Law where the effect of which, in the
aggregate for all such notices and communications, could
reasonably be expected to have a Material Adverse
Effect.
8N. Transactions are Legal and Authorized; Obligations are Enforceable.
(i) Transactions are Legal and Authorized. Each of the
issuance, sale and delivery of the Notes by the Company, the
execution and delivery of this Agreement by the Company, and
compliance by the Company with all of the provisions of this
Agreement and of the Notes:
(a) is within the corporate powers of the
Company; and
(b) is legal and does not conflict with,
result in any breach of any of the provisions of,
constitute a default under, or result in the creation of
any Lien upon any Property of the Company or any
Subsidiary under the provisions of, any agreement,
charter instrument, bylaw or other instrument to which
any such Person is a party or by which any such Person
or any of such Person's respective Properties may be
bound.
(ii) Obligations are Enforceable. Each of this Agreement
and the Notes have been duly authorized by all necessary action on
the part of the Company, have been duly executed and delivered by
authorized officers of the Company and constitute legal, valid and
<PAGE>
binding obligations of the Company, enforceable in accordance with
their respective terms except that the enforceability of this
Agreement and of the Notes may be limited by applicable bankruptcy,
reorganization, arrangement, insolvency, moratorium or other similar
laws affecting the enforceability of creditors' rights generally.
8O. Governmental Consent; Certain Laws.
(i) Governmental Consent. Neither the nature of the
Company or any Subsidiary, or of any of their respective businesses
or Properties, nor any relationship between the Company or any
Subsidiary and any other Person, nor any circumstance in connection
with the offer, issuance, sale or delivery of the Notes and the
execution and delivery of this Agreement, is such as to require a
consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority on the part of the
Company or any Subsidiary as a condition to the execution and
delivery of this Agreement or the offer, issuance, sale or delivery
of the Notes.
(ii) Certain Laws. Neither the Company nor any
Subsidiary is subject to regulation under, or otherwise required to
comply with any filing, registration or notice provisions of, (i)
the Investment Company Act of 1940, as amended, (ii) the Public
Utility Holding Company Act of 1935, as amended, or (iii) the
Federal Power Act, as amended.
8P. Private Offering of Notes. Neither the Company nor any Subsidiary has
offered any of the Notes or any similar Security of the Company for sale to, or
solicited offers to buy any thereof from, or otherwise approached or negotiated
with respect thereto with, any prospective purchaser other than you.
8Q. No Defaults; Transactions Prior to Closing Date, etc.
(i) No event has occurred and no condition exists that,
upon the execution and delivery of this Agreement or the issuance of
the Notes, would constitute a Default or an Event of Default.
(ii) Except as disclosed in Part 8Q(ii) of Annex 3
hereto, neither the Company nor any Subsidiary entered into any
transaction during the period beginning on September 30, 1995 and
ending on the Closing Date that would have been prohibited by
paragraphs 6B, 6C(4), 6D or 6E hereof had such paragraphs applied
during such period.
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8R. Use of Proceeds of Notes.
(i) Use of Proceeds. The Company will generally apply
the proceeds from the sale of the Notes to finance Capital
Expenditures of the Company.
(ii) Margin Securities. None of the transactions
contemplated herein and in the Notes (including, without limitation,
the use of the proceeds from the sale of the Notes) violates, will
violate or will result in a violation of section 7 of the Exchange
Act or any regulations issued pursuant thereto, including, without
limitation, Regulations G, T, U and X of the Board of Governors of
the Federal Reserve System, 12 C.F.R., Chapter II. The obligations
of the Company under this Agreement and the Notes are not and will
not be directly or indirectly secured (within the meaning of such
Regulation G) by any Margin Security, and no Notes are being sold on
the basis of any such collateral.
(iii) Absence of Foreign or Enemy Status. Neither the
sale of the Notes nor the use of proceeds from the sale thereof will
result in a violation of any of the foreign assets control
regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended), or any ruling issued thereunder
or any enabling legislation or Presidential Executive Order in
connection therewith.
8S. Solvency. The fair value of the business and assets of the Company is
in excess of the amount that will be required to pay its liabilities (including,
without limitation, contingent, subordinated, unmatured and unliquidated
liabilities on existing debts, as such liabilities may become absolute and
matured), in each case both prior to and after giving effect to the transactions
contemplated by this Agreement and the Notes. After giving effect to the
transactions contemplated by this Agreement and the Notes, the Company will not
be engaged in any business or transaction, or about to engage in any business or
transaction, for which it has unreasonably small capital, and the Company has or
had no intent to hinder, delay or defraud any entity to which it is, or will
become, on or after the Closing Date, indebted or to incur debts that would be
beyond its ability to pay as such debts mature.
PARAGRAPH 9. REPRESENTATIONS OF THE PURCHASER.
9. Representation of the Purchaser. You represent as follows:ions of the
Purchaser.
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9A. Nature of Purchase. You are not acquiring the Notes to be purchased by
you hereunder with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act, provided that the disposition
of your property shall at all times be and remain within your control.
9B. Source of Funds. The source of funds to be used by you to purchase the
Notes constitutes assets allocated to: (i) your "insurance company general
account" (as such term is defined under Section V of the United States
Department of Labor's Prohibited Transaction Class Exemption ("PTCE") 95-60)
and, as of the date of the purchase of the Notes, you satisfy all of the
applicable requirements for relief under Sections I and V of PTCE 95-60 or (ii)
as separate account maintained by you in which no employee benefit plan, other
than employee benefit plans identified on a list that has been furnished by such
Purchaser to the Company, participates to the extent of 10% or more.
PARAGRAPH 10. DEFINITIONS.
10. Definitions. For the purpose of this Agreement, the terms defined in
the introductory sentence and in paragraphs 1 and 2 shall have the respective
meanings specified therein, and the following terms shall have the meanings
specified with respect thereto below (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
10A. Yield-Maintenance Terms.
"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which commercial banks in New York City are required or authorized to
be closed.
"Called Principal" shall mean, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to paragraph 4B or is
declared to be immediately due and payable pursuant to paragraph 7A, as the
context requires.
"Discounted Value" shall mean, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called
<PAGE>
Principal of any Note, the yield to maturity implied by (i) the yields reported,
as of 10:00 a.m. (New York City time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display designated
as "Page 678" on the Telerate Service (or such other display as may replace Page
678 on the Telerate Service) for actively traded U.S. Treasury securities having
a maturity equal to the Remaining Average Life of such Called Principal as of
such Settlement Date, or if such yields shall not be reported as of such time or
the yields reported as of such time shall not be ascertainable, (ii) the
Treasury Constant Maturity Series yields reported, for the latest day for which
such yields shall have been so reported as of the Business Day next preceding
the Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date. Such
implied yield shall be determined, if necessary, by (a) converting U.S. Treasury
bill quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between yields reported for various
maturities.
"Remaining Average Life" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled Payment
of such Called Principal (but not of interest thereon) by (b) the number of
years (calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the
Called Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be prepaid pursuant
to paragraph 4B or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"Yield-Maintenance Amount" shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Yield-Maintenance Amount shall in no
<PAGE>
event be less than zero.
10B. Other Terms.
"Acceptable Control Persons" shall mean any members of the immediate family
of, or the respective heirs, executors or trustees holding for the sole benefit
of such heirs or members of the immediate family of, James T. Hudson.
"Affiliate" shall mean, at any time, a Person (other than a Subsidiary)
(i) that directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common
Control with, the Company,
(ii) that beneficially owns or holds 5% or more of any
class of the Voting Stock of the Company,
(iii) 5% or more of the Voting Stock (or in the case of
a Person that is not a corporation, 5% or more of the equity
interest) of which is beneficially owned or held by the Company or a
Subsidiary,
(iv) that is an officer or director (or a member of the
immediate family of an officer or director) of the Company or any
Subsidiary, or
(v) that is an Acceptable Control Person, a natural
Person in any manner related by birth or marriage to any Acceptable
Control Person or a Person owned or Controlled by any such Person,
at such time.
As used in this definition, "Control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Applicable Net Income Carryover" shall have the meaning specified
in paragraph 6A(1).
"Bank Credit Agreement" shall mean the Revolving Credit Agreement,
dated as of April 26, 1994, by and among the Company, the Banks and Rabobank, as
agent, as the same shall have been amended, modified or restated from time to
time, and any substitute or replacement credit facility in respect thereof.
<PAGE>
"Banks" shall mean each of Rabobank, Bank of America National Trust
and Savings Association, NationsBank of Texas, National Association, Caisse
Nationale de Credit Agricole, and Harris Trust and Savings Bank or any future
banks which become parties to the Bank Credit Agreement.
"Board of Directors" shall mean the board of directors of the
Company or a Subsidiary, as applicable, or any committee thereof that, in the
instance, shall have the lawful power to exercise the power and authority of
such board of directors.
"Capital Expenditure" shall have the meaning specified in paragraph
6E.
"Capital Lease" shall mean, at any time, a lease with respect to
which the lessee is required to recognize the acquisition of an asset and the
incurrence of a liability at such time in accordance with GAAP.
"Cash Flow Coverage Ratio" shall have the meaning specified in
paragraph 6A(4).
"Closing" or "Date of Closing" shall have the meaning specified in
paragraph 2.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning specified in the introductory
sentence hereof.
"Consolidated Indebtedness" shall have the meaning specified in
paragraph 6C(2)(iii).
"Consolidated Interest Expense" shall have the meaning specified in
paragraph 6A(4).
"Consolidated Lease Expense" shall have the meaning specified in
paragraph 6A(4).
"Consolidated Net Income" shall have the meaning specified in
paragraph 6A(4).
"Counted Assets" shall have the meaning specified in paragraph
6C(2)(iii).
"Current Debt" shall mean, with respect to any Person, (without
<PAGE>
duplication)
(i) the portion of the amount of liabilities for
borrowed money of such Person pursuant to a credit facility, under
which such Person borrows (and re-borrows) money on a short-term
basis for working capital purposes in the ordinary course of such
Person's business, that is at such time classified in good faith by
such Person as a current liability, and
(ii) all other liabilities for borrowed money, Capital
Leases and all liabilities secured by any Lien existing on Property
owned by such Person whether or not such liabilities have been
assumed, which, in each case are payable on demand or within one
year, except:
(a) any such liabilities which are renewable
or extendable at the option of such Person to a date
more than one year, and
(b) any such liabilities which, although
payable within one year, constitute payments required to
be made on account of principal of Indebtedness
initially expressed to mature more than one year from
origination.
"Environmental Protection Law" shall mean any federal, state,
county, regional or local law, statute or regulation (including, without
limitation, CERCLA, RCRA and SARA) enacted in connection with or relating to the
protection or regulation of the environment, including, without limitation,
those laws, statutes and regulations regulating the disposal, removal,
production, storing, refining, handling, transferring, processing or
transporting of Hazardous Substances, and any regulations issued or promulgated
in connection with such statutes by any Governmental Authority, and any orders,
decrees or judgments issued by any court of competent jurisdiction in connection
with any of the foregoing. As used in this definition:
"CERCLA" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended from
time to time (by SARA or otherwise), and all rules and regulations
promulgated in connection therewith.
"RCRA" shall mean the Resource Conservation and Recovery
Act of 1976, as amended from time to time, and all rules and
regulations promulgated in connection therewith.
<PAGE>
"SARA" shall mean the Superfund Amendments and
Reauthorization Act of 1986, as amended from time to time, and all
rules and regulations promulgated in connection therewith.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any corporation which is a member of
the same controlled group of corporations as the Company within the meaning of
section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) of the Code.
"Event of Default" shall mean any of the events specified in
paragraph 7A, provided that there has been satisfied any requirement in
connection with such event for the giving of notice, or the lapse of time, or
the happening of any further condition, event or act, and "Default" shall mean
any of such events, whether or not any such requirement has been satisfied.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean, at any time, with respect to any
Property, the sale value of such Property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller under no compulsion to buy or sell, respectively.
"GAAP" shall have the meaning specified in paragraph 10C.
"Governmental Authority" shall mean:
(i) the government of
(a) the United States of America and any
state or other political subdivision thereof, or
(b) any other jurisdiction (A) in which the
Company or any Subsidiary conducts all or any part of
its business or (B) that asserts jurisdiction over the
conduct of the affairs or Properties of the Company or
any Subsidiary; and
(ii) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining
<PAGE>
to, any such government.
"Guaranty" shall mean, with respect to any Person (for the purposes
of this definition, the "Guarantor"), any obligation (except the endorsement in
the ordinary course of business of negotiable instruments for deposit or
collection) of the Guarantor guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person (the "Primary
Obligor") in any manner, whether directly or indirectly, including, without
limitation, obligations incurred through an agreement, contingent or otherwise,
by the Guarantor:
(i) to purchase such indebtedness or obligation or any
Property constituting security therefor;
(ii) to advance or supply funds
(a) for the purpose of payment of such
indebtedness, dividend or other obligation, or
(b) to maintain working capital or other
balance sheet condition or any income statement
condition of the Primary Obligor or otherwise to advance
or make available funds for the purchase or payment of
such indebtedness, dividend or other obligation;
(iii) to lease Property or to purchase Securities or
other Property or services primarily for the purpose of assuring the
owner of such indebtedness or obligation of the ability of the
Primary Obligor to make payment of the indebtedness or obligation;
or
(iv) otherwise to assure the owner of the indebtedness
or obligation of the Primary Obligor against loss in respect
thereof.
For purposes of computing the amount of any Guaranty in connection with any
computation of indebtedness or other liability, it shall be assumed that the
indebtedness or other liabilities that are the subject of such Guaranty are
direct obligations of the issuer of such Guaranty.
"Hazardous Substances" shall mean any and all pollutants,
contaminants, toxic or hazardous wastes and any other substances that might pose
a hazard to health or safety, the removal of which may be required or the
generation, manufacture, refining, production, processing, treatment, storage,
<PAGE>
handling, transportation, transfer, use, disposal, release, discharge, spillage,
seepage or filtration of which is or shall be, in each of the foregoing cases,
restricted, prohibited or penalized by any applicable law.
"Health Laws" shall mean any federal, state, county, regional or
local law, statute or regulation enacted in connection with, or relating to, the
processing, production, use, marketing or sale of meat, poultry, feed and other
food products (and any similar businesses of the Company and the Subsidiaries),
including, without limitation, all regulations issued or promulgated in
connection with such laws and statutes by any Governmental Authority (including,
without limitation, the United States Department of Agriculture and the United
States Food and Drug Administration), and any orders, decrees or judgments
issued by any court of competent jurisdiction in connection with any of the
foregoing.
"Hudson Development" shall mean Hudson Development Corporation, an
Arkansas corporation.
"Hudson Foreign Sales" shall mean Hudson Foods Foreign Sales, Inc.,
a corporation organized under the laws of the United States Virgin Islands.
"Hudson Midwest" shall mean Hudson Midwest Foods, Inc., a Nebraska
corporation.
"Hudson Poland" shall mean Hudson Foods Poland s.p. zo.o, a limited
liability company organized under the laws of Poland.
"Indebtedness" shall mean, at any time, with respect to any Person,
without duplication:
(i) all indebtedness of such Person for borrowed money
or for the deferred purchase price of Property acquired by, or
services rendered to, such Person,
(ii) all indebtedness of such Person created or arising
under any conditional sale or other title retention agreement with
respect to any Property acquired by such Person,
(iii) the present value, determined in accordance with
GAAP, of all obligations of such Person under leases which shall
have been or should be recorded as Capital Leases in accordance with
GAAP,
(iv) all indebtedness or other payment obligations for
<PAGE>
the deferred purchase price of property or services secured by any
Lien upon or in any Property owned by such Person whether or not
such Person has assumed or become liable for the payment of such
indebtedness,
(v) indebtedness arising under acceptance facilities, in
connection with surety or other similar bonds, and the undrawn
maximum face amount of all outstanding letters of credit issued for
the account of such Person and, without duplication, the outstanding
amount of all drafts drawn thereunder,
(vi) Swaps of such Person,
(vii) all liabilities of such Person in respect of
unfunded vested benefits under Pension Plans and all asserted
withdrawal liabilities of such Person or a commonly controlled
entity to a Multiemployer Plan, and
(viii) all direct or indirect Guaranties by such Person
of indebtedness described in this definition of any other Person;
provided, that, for purposes of this definition, Trade Debt and Operating Leases
shall not be included. As used in this definition:
"Swaps" shall mean, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps and
similar obligations obligating such Person to make payments, whether
periodically or upon the happening of a contingency. For purposes of
this Agreement, the amount of the obligation under any Swap shall be
the amount determined in respect thereof as of the end of the then
most recently ended fiscal quarter of such Person, based on the
assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating
to such Swap provides for the netting of amounts payable by and to
such Person thereunder or if any such agreement provides for the
simultaneous payment of amounts by and to such Person, then in each
such case, the amount of such obligation shall be the net amount so
determined.
"Trade Debt" shall mean trade accounts payable incurred
in the ordinary course of business with an original maturity or due
date of not greater than 180 days from the creation thereof (and
which are not overdue for more than 30 days).
<PAGE>
"Institutional Investor" shall mean you, any of your affiliates and
any holder or beneficial owner of Notes that is an "accredited investor" as
defined in section 2(15) of the Securities Act.
"Intangible Assets" shall have the meaning specified in paragraph
6A(1).
"Leverage Ratio" shall have the meaning specified in paragraph
6A(3).
"Lien" shall mean any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the Property, whether
such interest is based on the common law, statute or contract, and including,
but not limited to, the security interest lien arising from a mortgage,
encumbrance, pledge, conditional sale, sale with recourse or a trust receipt, or
a lease, consignment or bailment for security purposes. The term "Lien"
includes, without limitation, reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting real Property and includes, without
limitation, with respect to stock, stockholder agreements, voting trust
agreements, buy-back agreements and all similar arrangements. For the purposes
hereof, the Company and each Subsidiary shall be deemed to be the owner of any
Property that it shall have acquired or holds subject to a conditional sale
agreement, Capital Lease or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes, and such retention or vesting is deemed a Lien. The term "Lien" does
not include negative pledge clauses in agreements relating to the borrowing of
money.
"Margin Security" shall mean "margin stock" within the meaning of
Regulations G, T and X of the Board of Governors of the Federal Reserve System,
12 C.F.R., Chapter II, as amended from time to time.
"Material Adverse Effect" shall mean a material adverse effect on
(i) the business, prospects, profits, Properties or
condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole,
(ii) the ability of the Company to perform its
obligations set forth in this Agreement and in the Notes, or
(iii) the validity or enforceability of any of the terms
or provisions of this Agreement or the Notes.
<PAGE>
"Most Recent 10-K" shall mean the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1995, as filed with the Securities
and Exchange Commission.
"Multiemployer Plan" shall mean any "multiemployer plan" (as defined
in section 3(37) of ERISA) in respect of which the Company or any ERISA
Affiliate is an "employer" (as such term is defined in section 3 of ERISA).
"Net Tangible Assets" shall have the meaning specified in paragraph
6C(5).
"Notes" shall have the meaning specified in paragraph 1.
"Officer's Certificate" shall mean a certificate signed in the name
of the Company by its President, one of its Vice Presidents or its Treasurer.
"Ohse" shall mean Ohse Transportation, Inc., a Kansas corporation.
"Operating Lease" shall have the meaning specified in paragraph
6A(4).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor entity.
"Pension Plan" shall mean, at any time, any "employee pension
benefit plan" (as such term is defined in section 3 of ERISA) maintained at such
time by the Company or any ERISA Affiliate for employees of the Company or such
ERISA Affiliate, excluding any Multiemployer Plan.
"Person" shall mean an individual, sole proprietorship, partnership,
corporation, trust, limited liability company, joint venture, unincorporated
organization, or a government or agency or political subdivision thereof.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
"Rabobank" shall mean Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A. ("Rabobank Nederland"), New York Branch.
"Required Holder(s)" shall mean the holder or holders of at least 66
2/3% of the aggregate principal amount of the Notes from time to time
outstanding.
<PAGE>
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security" shall mean "security" as defined in section 2(1) of the
Securities Act.
"Senior Financial Officer" shall mean the chief financial officer,
the principal accounting officer, the treasurer or the comptroller of the
Company.
"Senior Officer" shall mean the chief executive officer, the chief
operating officer, the president, the chief financial officer, the treasurer or
the secretary of the Company.
"Subordinated Debt" shall mean, at any time, any unsecured
Indebtedness of the Company or a Subsidiary that is in any respect subordinate
or junior in right of payment or otherwise to the Indebtedness evidenced by the
Notes or to any other Indebtedness of the Company or any Subsidiary.
"Subsidiary" shall mean, at any time, any corporation of which the
Company owns, directly or indirectly, more than 50% (by number of votes) of each
class of the Voting Stock of such corporation at such time.
"Subsidiary Guaranty" shall mean a Guaranty Agreement, substantially
in the form of Exhibit E hereto, executed by a Subsidiary in favor of the
holders of Notes pursuant to paragraph 5I hereof guarantying the Company's
obligations under this Agreement and the Notes.
"Surviving Corporation" shall have the meaning specified in
paragraph 6C(4)(i).
"Tangible Net Worth" shall have the meaning specified in paragraph
6A(1).
"Total Subsidiary Indebtedness" shall have the meaning specified in
paragraph 6C(2)(iii).
"Transferee" shall mean any direct or indirect transferee of all or
any part of any Note purchased by you under this Agreement.
"Transfers" shall have the meaning specified in paragraph
6C(4)(iii).
"Voting Stock" shall mean capital stock of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
<PAGE>
contingencies, entitled to elect corporate directors (or Persons performing
similar functions).
"Wholly-Owned Subsidiary" shall mean, at any time, any Subsidiary
100% of all of the equity Securities (except directors' qualifying shares) and
voting Securities of which are owned by any one or more of the Company and the
other Wholly-Owned Subsidiaries at such time.
10C. Accounting Principles, Term and Determinations. All references
in this Agreement to "GAAP" shall be deemed to refer to generally accepted
accounting principles in effect in the United States at the time of application
thereof. Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all determinations with respect to accounting matters
hereunder shall be made, and all unaudited financial statements and certificates
and reports as to financial matters required to be furnished hereunder shall be
prepared, in accordance with generally accepted accounting principles, applied
on a basis consistent with the most recent audited consolidated financial
statements of the Company and its Subsidiaries delivered pursuant to clause (ii)
of paragraph 5A or, if no such statements have been so delivered, the most
recent audited financial statements referred to in clause (i) of paragraph 8B.
PARAGRAPH 11. MISCELLANEOUS.
11A. Note Payments. So long as you shall hold any Note, the Company
will make payments of principal of, interest on and any Yield-Maintenance Amount
payable with respect to such Note, which comply with the terms of this
Agreement, by wire transfer of immediately available funds for credit (not later
than 12:00 noon, New York City time, on the date due) to your account or
accounts as specified in the Purchaser Schedule attached hereto, or such other
account or accounts in the United States as you may designate in writing,
notwithstanding any contrary provision herein or in any Note with respect to the
place of payment. You agree that, before disposing of any Note, you will make a
notation thereon (or on a schedule attached thereto) of all principal payments
previously made thereon and of the date to which interest thereon has been paid.
The Company agrees to afford the benefits of this paragraph 11A to any
Transferee which shall have made the same agreement as you have made in this
paragraph 11A.
11B. Expenses. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save you and any
Transferee harmless against liability for the payment of, all out-of-pocket
expenses arising in connection with such transactions, including (i) all
document production and duplication charges and the fees and expenses of any
special counsel engaged by you or such Transferee in connection with this
<PAGE>
Agreement, the transactions contemplated hereby and any subsequent proposed
modification of, or proposed consent under, this Agreement, whether or not such
proposed modification shall be effected or proposed consent granted, and (ii)
the costs and expenses, including attorneys' fees, incurred by you or such
Transferee in enforcing (or determining whether or how to enforce) any rights
under this Agreement or the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement or the transactions contemplated hereby or by reason of your or such
Transferee's having acquired any Note, including without limitation costs and
expenses incurred in any bankruptcy case. The obligations of the Company under
this paragraph 11B shall survive the transfer of any Note or portion thereof or
interest therein by you or any Transferee and the payment of any Note.
11C. Consent to Amendments. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
to such amendment, action or omission to act, of the Required Holder(s) except
that, without the written consent of the holder or holders of all Notes at the
time outstanding, no amendment to this Agreement shall change the maturity of
any Note, or change the principal of, or the rate or time of payment of interest
on or any Yield-Maintenance Amount payable with respect to any Note, or affect
the time, amount or allocation of any prepayments, or change the proportion of
the principal amount of the Notes required with respect to any consent,
amendment, waiver or declaration. Each holder of any Note at the time or
thereafter outstanding shall be bound by any consent authorized by this
paragraph 11C, whether or not such Note shall have been marked to indicate such
consent, but any Notes issued thereafter may bear a notation referring to any
such consent. No course of dealing between the Company and the holder of any
Note nor any delay in exercising any rights hereunder or under any Note shall
operate as a waiver of any rights of any holder of such Note. As used herein and
in the Notes, the term "this Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes.
The Notes are issuable as registered notes without coupons in denominations of
at least $100,000, except as may be necessary to reflect any principal amount
not evenly divisible by $100,000. The Company shall keep at its principal office
a register in which the Company shall provide for the registration of Notes and
of transfers of Notes. Upon surrender for registration of transfer of any Note
at the principal office of the Company, the Company shall, at its expense,
execute and deliver one or more new Notes of like tenor and of a like aggregate
principal amount, registered in the name of such transferee or transferees. At
the option of the holder of any Note, such Note may be exchanged for other Notes
of like tenor and of any authorized denominations, of a like aggregate principal
<PAGE>
amount, upon surrender of the Note to be exchanged at the principal office of
the Company. Whenever any Notes are so surrendered for exchange, the Company
shall, at its expense, execute and deliver the Notes which the holder making the
exchange is entitled to receive. Every Note surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such Note or such
holder's attorney duly authorized in writing. Any Note or Notes issued in
exchange for any Note or upon transfer thereof shall carry the rights to unpaid
interest and interest to accrue which were carried by the Note so exchanged or
transferred, so that neither gain nor loss of interest shall result from any
such transfer or exchange. Upon receipt of written notice from the holder of any
Note of the loss, theft, destruction or mutilation of such Note and, in the case
of any such loss, theft or destruction, upon receipt of such holder's unsecured
indemnity agreement, or in the case of any such mutilation upon surrender and
cancellation of such Note, the Company will make and deliver a new Note, of like
tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
11E. Persons Deemed Owners; Participations. Prior to due presentment
for registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of, interest on and any Yield-Maintenance Amount
payable with respect to such Note and for all other purposes whatsoever, whether
or not such Note shall be overdue, and the Company shall not be affected by
notice to the contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in such Note to any Person on
such terms and conditions as may be determined by such holder in its sole and
absolute discretion, provided that any such participation shall be in a
principal amount of at least $100,000.
11F. Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by you of any Note or
portion thereof or interest therein and the payment of any Note, and may be
relied upon by any Transferee, regardless of any investigation made at any time
by or on behalf of you or any Transferee. Subject to the preceding sentence,
this Agreement and the Notes embody the entire agreement and understanding
between you and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof.
11G. Successors and Assigns. All covenants and other agreements in
this Agreement contained by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not.
<PAGE>
11H. Disclosure to Other Persons. The Company acknowledges that the
holder of any Note may deliver copies of any financial statements and other
documents delivered to such holder, and disclose any other information disclosed
to such holder, by or on behalf of the Company or any Subsidiary in connection
with or pursuant to this Agreement to (i) such holder's directors, officers,
employees, agents and professional consultants, (ii) any other holder of any
Note, (iii) any Person to which such holder offers to sell such Note or any part
thereof, (iv) any Person to which such holder sells or offers to sell a
participation in all or any part of such Note, (v) any Person from which such
holder offers to purchase any security of the Company, (vi) any federal or state
regulatory authority having jurisdiction over such holder, (vii) the National
Association of Insurance Commissioners or any similar organization or (viii) any
other Person to which such delivery or disclosure may be necessary or
appropriate (a) in compliance with any law, rule, regulation or order applicable
to such holder, (b) in response to any subpoena or other legal process or
informal investigative demand or (c) in connection with any litigation to which
such holder is a party.
11I. Notices. All notices or other communications provided for
hereunder (except for the telephonic notice required by paragraph 4D) shall be
in writing and sent by first class mail or nationwide overnight delivery service
(with charges prepaid) and (i) if to you, addressed to you at the address
specified for such communications in the Purchaser Schedule attached hereto, or
at such other address as such Purchaser shall have specified to the Company in
writing, (ii) if to any other holder of any Note, addressed to such other holder
at such address as such other holder shall have specified to the Company in
writing or, if any such other holder shall not have so specified an address to
the Company, then addressed to such other holder in care of the last holder of
such Note which shall have so specified an address to the Company, and (iii) if
to the Company, addressed to it at 1225 Hudson Road, Rogers, Arkansas 72756,
Attention: Charles B. Jurgensmeyer, Chief Financial Officer and Executive Vice
President, and Tommy D. Reynolds, Secretary and Treasurer, or at such other
address as the Company shall have specified to the holder of each Note in
writing; provided, however, that any such communication to the Company may also,
at the option of the holder of any Note, be delivered by any other means either
to the Company at its address specified above or to any officer of the Company.
11J. Payments Due on Non-Business Days. Anything in this Agreement
or the Notes to the contrary notwithstanding, any payment of principal of or
interest on any Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day. If the date for any payment is
extended to the next succeeding Business Day by reason of the preceding
sentence, the period of such extension shall be included in the computation of
the interest payable on such Business Day.
<PAGE>
11K. Satisfaction Requirement. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to you or to the Required Holder(s), the
determination of such satisfaction shall be made by you or the Required
Holder(s), as the case may be, in the sole and exclusive judgment (exercised in
good faith) of the Person or Persons making such determination.
11L. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF NEW YORK. This Agreement may not be changed orally, but (subject
to the provisions of paragraph 11C) only by an agreement in writing signed by
the party against whom enforcement of any waiver, change, modification or
discharge is sought.
11M. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11N. Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11O. Maximum Interest Payable. The Company, you and any other
holders of the Notes specifically intend and agree to limit contractually the
amount of interest payable under this Agreement, the Notes and all other
instruments and agreements related hereto and thereto to the maximum amount of
interest lawfully permitted to be charged under applicable law. Therefore, none
of the terms of this Agreement, the Notes or any instrument pertaining to or
relating to this Agreement or the Notes shall ever be construed to create a
contract to pay interest at a rate in excess of the maximum rate permitted to be
charged under applicable law, and neither the Company, any guarantor nor any
other party liable or to become liable hereunder, under the Notes, any guaranty
or under any other instruments and agreements related hereto and thereto shall
ever be liable for interest in excess of the amount determined at such maximum
rate, and the provisions of this paragraph 11O shall control over all other
provisions of this Agreement, any Notes, any guaranty or any other instrument
pertaining to or relating to the transactions herein contemplated. If any amount
of interest taken or received by you or any holder of a Note shall be in excess
of said maximum amount of interest which, under applicable law, could lawfully
have been collected by you or such holder incident to such transactions, then
<PAGE>
such excess shall be deemed to have been the result of a mathematical error by
all parties hereto and shall be refunded promptly by the Person receiving such
amount to the party paying such amount, or, at the option of the recipient,
credited ratably against the unpaid principal amount of the Note or Notes held
by you or such holder, respectively. All amounts paid or agreed to be paid in
connection with such transactions which would under applicable law be deemed
"interest" shall, to the extent permitted by such applicable law, be amortized,
prorated, allocated and spread throughout the stated term of this Agreement and
the Notes. "Applicable law" as used in this paragraph means that law in effect
from time to time which permits the charging and collection of the highest
permissible lawful, nonusurious rate of interest on the transactions herein
contemplated, and "maximum rate" as used in this paragraph means, with respect
to each of the Notes, the maximum lawful, nonusurious rates of interest (if any)
which under applicable law may be charged to the Company from time to time with
respect to such Notes.
11P. Jurisdiction; Service of Process.
THE COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
NOTES, OR ANY ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT
IN RESPECT OF ANY BREACH HEREUNDER OR UNDER THE NOTES, BROUGHT BY YOU OR ANY
OTHER REGISTERED HOLDER OF A NOTE AGAINST THE COMPANY OR ANY OF ITS PROPERTY,
MAY BE BROUGHT BY SUCH PERSON IN THE COURTS OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK OR ANY STATE COURT SITTING IN NEW YORK,
NEW YORK, AS YOU OR SUCH OTHER REGISTERED HOLDER OF A NOTE MAY IN ITS SOLE
DISCRETION ELECT, AND BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
COMPANY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE NON-EXCLUSIVE IN PERSONAM
JURISDICTION OF EACH SUCH COURT, AND AGREES THAT PROCESS SERVED EITHER
PERSONALLY OR BY REGISTERED MAIL SHALL CONSTITUTE, TO THE EXTENT PERMITTED BY
LAW, ADEQUATE SERVICE OF PROCESS IN ANY SUCH SUIT, AND THE COMPANY IRREVOCABLY
WAIVES AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE,
ANY CLAIM THAT THE COMPANY IS NOT SUBJECT TO THE IN PERSONAM JURISDICTION OF ANY
SUCH COURT. RECEIPT OF PROCESS SO SERVED SHALL BE CONCLUSIVELY PRESUMED AS
EVIDENCED BY A DELIVERY RECEIPT FURNISHED BY THE UNITED STATES POSTAL SERVICE OR
ANY COMMERCIAL DELIVERY SERVICE. IN ADDITION, THE COMPANY HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT THE COMPANY
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND/OR THE NOTES,
BROUGHT IN SUCH COURTS, AND HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE
ABILITY OF YOU OR OTHER REGISTERED HOLDER OF A NOTE TO SERVE ANY SUCH WRITS,
PROCESS OR SUMMONSES IN ANY MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN
<PAGE>
JURISDICTION OVER THE COMPANY IN SUCH OTHER JURISDICTION, AND IN SUCH MANNER, AS
MAY BE PERMITTED BY APPLICABLE LAW. THE COMPANY AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
11Q. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument.
<PAGE>
If you are in agreement with the foregoing, please sign the form of acceptance
on the enclosed counterparts of this letter and return the same to the Company,
whereupon this letter shall become a binding agreement among the Company and the
Purchasers.
Very truly yours,
HUDSON FOODS, INC.
By________________________
Title:
The foregoing Agreement is hereby accepted as of the date first above written.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By_________________________
Vice President
<PAGE>
ANNEX I
PURCHASER SCHEDULE
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA $50,000,000 $50,000,000
(1) All payments on account of Notes held by such purchaser shall be made by
wire transfer of immediately available funds for credit to:
Account No. 890-0304-391
Bank of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall set forth the name of the Company, a reference to
"6.97% Senior Notes due December 6, 2006, Security No. !INV5530!", and the due
date and application (as among principal, interest and Yield-Maintenance Amount)
of the
payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Attention: Investment Operations Group (Attention: Manager)
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
2200 Ross Avenue
Suite 4200E
Dallas, Texas 75201
Attention: Managing Director
(4) Recipient of telephonic prepayment notices:
Manager, Asset Management Unit
(201) 802-5260
(5) Tax Identification No.: 22-1211670
<PAGE>
EXHIBIT A
HUDSON FOODS, INC.
6.97% SENIOR NOTE DUE DECEMBER 6, 2006
No. _____ [Date]
$--------
FOR VALUE RECEIVED, the undersigned, HUDSON FOODS, INC. (the
"Company"), a corporation organized and existing under the laws of the State of
Delaware, hereby promises to pay to ____________________________
___________________________, or registered assigns, the principal sum of
_________________________ DOLLARS on _____________, ____, with interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) (a) on the unpaid balance thereof at the rate of 6.97% per annum from the
date hereof, payable monthly on the 6th day of each month in each year,
commencing with the 6th day of the calendar month next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b) on
any overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Yield-Maintenance Amount (as
defined in the Note Agreement referred to below), payable monthly as aforesaid
(or, at the option of the registered holder hereof, on demand), at a rate per
annum from time to time equal to the lesser of (a) the maximum rate permitted by
applicable law or (b) the greater of (i) 8.97% or (ii) 2.0% over the rate of
interest publicly announced by Morgan Guaranty Trust Company of New York from
time to time in New York City as its Prime Rate.
Payments of principal of, interest on and any Yield-Maintenance
Amount payable with respect to this Note are to be made at the main office of
Bank of New York in New York City or at such other place as the holder hereof
shall designate to the Company in writing, in lawful money of the United States
of America.
This Note is one of a series of Senior Notes (the "Notes") issued
pursuant to a Note Agreement, dated as of December 6, 1996 (the "Agreement"),
among the Company and The Prudential Insurance Company of America and is
entitled to the benefits thereof.
This Note is a registered Note and, as provided in the Agreement,
upon surrender of this Note for registration of transfer, duly endorsed, or
<PAGE>
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
The Company agrees to make required prepayments of principal on the
dates and in the amounts specified in the Agreement. This Note is also subject
to optional prepayment, in whole or from time to time in part, on the terms
specified in the Agreement.
If an Event of Default, as defined in the Agreement, shall occur and
be continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the Agreement.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default, notice of intent to accelerate, notice of acceleration (to the extent
set forth in the Agreement), protest and diligence in collecting.
Should any indebtedness represented by this Note be collected at law
or in equity, or in bankruptcy or other proceedings, or should this Note be
placed in the hands of attorneys for collection, the Company agrees to pay, in
addition to the principal, premium, if any, and interest due and payable hereon,
all costs of collecting or attempting to collect this Note, including reasonable
attorneys' fees and expenses (including those incurred in connection with any
appeal).
The Company, and the purchaser and the registered holder of this
Note specifically intend and agree to limit contractually the amount of interest
payable under this Note to the maximum amount of interest lawfully permitted to
be charged under applicable law. Therefore, none of the terms of this Note shall
ever be construed to create a contract to pay interest at a rate in excess of
the maximum rate permitted to be charged under applicable law, and neither the
Company nor any other party liable or to become liable hereunder shall ever be
liable for interest in excess of the amount determined at such maximum rate, and
the provisions of paragraph 11O of the Agreement shall control over any contrary
provision of this Note.
<PAGE>
THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE.
HUDSON FOODS, INC.
By_________________________
Secretary/Treasurer
<PAGE>
EXHIBIT B
[FORM OF OPINION OF COMPANY'S COUNSEL]
EXHIBIT 15
HUDSON FOODS, INC. AND SUBSIDIARIES
LETTER REGARDING UNAUDITED INTERIM FINANCIAL INFORMATION
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Hudson Foods, Inc.
Registration on Forms S-8
We are aware that our report dated January 21, 1997 on our review of the interim
financial information of Hudson Foods, Inc. for the periods ended December 28,
1996 and December 30, 1995, and included in this Form 10-Q is incorporated by
reference in the Company's registration statements on Form S-8 (File nos.
33-36690 and 33-41839). Pursuant to Rule 436(c) under the Securities Act of
1933, this report should not be considered a part of the registration statement
prepared or certified by us within the meaning of Sections 7 and 11 of that Act.
Coopers & Lybrand L.L.P.
Tulsa, Oklahoma
January 27, 1997
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